Financial Crime Weekly: UPS Pays $45M Fine, BIT Mining Pays $4M Fine For Bribery

UPS Pays $45 Million Fine For Improperly Valuing Its Worst-Performing Business 

The Securities and Exchange Commission (SEC) announced on Friday that it settled charges against United Parcel Service Inc. UPS for materially misrepresenting its earnings because it failed to follow generally accepted accounting principles (GAAP) when valuing one of its worst performing businesses.  

The SEC found that UPS did not record a goodwill impairment for its UPS Freight business division in 2019. If UPS had properly valued Freight, its earnings and other reported items would have been materially lower, the SEC said. 

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"Goodwill balances provide investors with valuable insight into whether companies are successfully operating the businesses they own," said Melissa Hodgman, Associate Director at SEC. 

"Therefore, it is essential for companies to prepare reliable fair value estimates and impair goodwill when required. UPS fell short of these obligations, repeatedly ignoring its own well-founded sale price estimates for Freight in favor of unreliable third-party valuations," Hodgman added. 

In addition to the $45 million civil penalty, UPS agreed to cease and desist from further violations of these provisions, adopt training requirements for certain officers, directors, and employees, and retain an independent compliance consultant to review and make recommendations about the company's fair value estimates and disclosure obligations.

BIT Mining To Pay $4 Million Fine For Bribery 

The SEC announced on Monday that BIT Mining Ltd. BTCM, formerly known as 500.com Limited, agreed to pay a $4 million civil penalty to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) from 2017 to 2019 by conducting a widespread bribery scheme to influence foreign officials, including members of Japan's parliament. 

The SEC's order finds that the bribery scheme involved illicit payments of approximately $2.5 million in the form of cash bribes, entertainment and trips. The order further finds that the bribes were authorized by a 500.com senior executive in an attempt to establish an integrated resort casino in Japan. 

"Investors must have confidence that the operations and performance of public companies reflect merit and legitimate considerations. Bribery and corruption turn that dynamic on its head, distorting the orderly operation of the markets and undermining investor confidence," said Charles E. Cain, Chief of the SEC Enforcement Division's FCPA Unit. 

Additionally, the US Department of Justice announced on the same day that it entered into a deferred prosecution agreement in which BIT Mining agreed to pay a $10 million criminal fine, of which $4 million will be satisfied by the company's payment of a civil penalty to the SEC. 

More Crime Stories: Here are other crime stories covered by Benzinga this week. 

• Archegos Capital's Bill Hwang Receives 18 Year Sentence For Fraud, Market Manipulation
• Indian Billionaire, One Of The World’s Richest Men, Indicted For Alleged $250 Million Bribery Scheme
• Bitfinex Bitcoin Laundering Case Lands ‘Crocodile Of Wall Street’ In Jail

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