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UPDATE 3-Computershare's Georgeson unit resolves U.S. fraud probe for $4.5 mln
November 30, 2017 / 7:04 PM / in 12 days

UPDATE 3-Computershare's Georgeson unit resolves U.S. fraud probe for $4.5 mln

(Adds comment from Georgeson)

By Nate Raymond

BOSTON, Nov 30 (Reuters) - Proxy solicitation firm Georgeson LLC will pay $4.5 million to resolve U.S. prosecutors’ claims that its employees paid bribes to obtain confidential information about how clients of proxy advisory firm Institutional Shareholder Services voted on corporate matters.

Federal prosecutors in Boston announced on Thursday that Georgeson, a unit of Computershare Ltd, had entered into a deferred prosecution agreement to resolve the investigation.

Under the agreement, Georgeson admitted that its employees engaged in the scheme. Georgeson agreed to cooperate with prosecutors, review its internal policies and hire an independent compliance and ethics consultant.

Prosecutors also filed a criminal case against Georgeson, which will be dropped if it abides by the agreement’s terms for three years.

“We would like to apologize sincerely to all of our clients and employees who have been affected by this issue,” Georgeson said in a statement.

The deal came ahead of a February trial in the case of four ex-Georgeson employees charged with participating in schemes to obtain information from ISS and to bill clients for bribes used to do so.

The probe has been closely watched in the tight-knit community of businesses involved in corporate elections. Proxy solicitors help companies assess whether shareholders will vote for or against management recommendations.

Prosecutors said that from 2007 to 2012, Georgeson employees sought a competitive edge by agreeing to provide ISS employee Brian Bennett concert and sports tickets for information about how ISS clients voted on shareholder proposals.

At Georgeson employee Michael Sedlak’s request, Bennett accessed ISS’s computer systems to obtain voting information in exchange for bribes that included two tickets worth $1,400 to a Boston Celtics basketball game, prosecutors said.

They said Sedlak forwarded the information to Georgeson employees Donna Ackerly, Charles Garske, Richard Gottcent and Keith Haynes, some of whom in turn provided the information to Georgeson’s clients.

Prosecutors said Ackerly, Garske and Haynes also sometimes arranged to allow Sedlak to bill Georgeson’s clients for the bribes and instructed the firm’s billing department to describe the charges as legitimate-sounding.

ISS in 2013 agreed to pay $300,000 to resolve U.S. Securities and Exchange Commission charges it failed to safeguard client information.

Bennett pleaded guilty in 2015 to conspiring to commit wire fraud and was sentenced in January to one year of probation.

Haynes pleaded guilty in December and has agreed to cooperate with prosecutors. The other ex-Georgeson employees have pleaded not guilty to conspiracy and wire fraud charges.

The case is U.S. v. Georgeson LLC, U.S. District Court, District of Massachusetts, No. 17-cr-10367. (Reporting by Nate Raymond in Boston; Editing by Leslie Adler and Tom Brown)

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