By Morgan McKinlay
GlaxoSmithKline is a British pharmaceutical company that has products ranging from prescription level medicine, to consumer products. Between 2010 and 2013, GlaxoSmithKline (“GSK”) bribed unidentified foreign officials in order to increase their pharmaceutical sales. The bribes included gifts, travel, shopping, and entertainment to the officials, some of whom included health care officials. The gifts were improperly logged in GSK’s account books as legitimate expenses as an attempt to hide the charges. The U.S. Security and Exchange Commission (“SEC”), and the Department of Justice (“DOJ”) began investigating GSK’s practices in 2010. However, the SEC has recently settled with GSK for $20 million. The company entered into agreements with the SEC without denying or affirming the charges against them; they cooperated and agreed to settle.
Some readers may wonder how the SEC and DOJ can have jurisdiction over a company that is not incorporated under U.S law. The answer is pretty simple: even though the company is a British corporation, the SEC and DOJ are able to file charges against GSK since the company sells its products in the United States and since it trades on the New York Stock Exchange. Additionally, the charges brought against GSK by the SEC were claims of violating the Foreign Corrupt Practices Act of 1977 (15 U.S.C. 78dd). The Act makes it illegal for foreign businesses to bribe anyone with personal gifts or expenses. Since GSK disguised the bribes as legitimate expenses, the SEC was able to bring clear charges against the company. The DOJ had a parallel suit against GSK, but those charges were dropped once the settlement was agreed upon. While the DOJ has remained pretty tight lipped about why the charges were dropped, could it have been that the DOJ agreed to drop charges as long as GSK agreed to the negotiations with the SEC?
Since the investigations began, two other companies (Novartis AG and AstraZeneca Plc) have been charged in a similar way and have both settled with the SEC. While GSK’s case is the most publicized considering the size of company, it is certainly not the only company that partakes in these practices. With the size and influence of this company, this could mean any number of things for the business world. GSK can be an example of SEC’s willingness to go to great lengths to investigate corrupt practices in foreign companies that sell in the United States. Additionally, it could mean a loosening of SEC’s authoritative power considering they settled for a fine instead of further punitive measures. Finally, it could be an example of the power of the pharmaceutical industry and how quickly it is growing. Does this case mean that the pharmaceutical industry is growing more powerful? Or does it mean that the government is attempting—and possibly failing—to crack down on abuses of power? The answer could only be known with more time and more analysis of the SEC’s pattern of investigation into these issues
 Ezequiel Minaya, GlaxoSmithKline to Pay $20 Million to Settle SEC Bribery Probe, Wall Street J., (Sept. 30, 2016), https://www.wsj.com/articles/glaxosmithkline-to-pay-20-million-to-settle-sec-bribery-probe-1475268346.
 Sarah N. Lynch, GlaxoSmithKline to Pay $20 Million to Settle U.S. Foreign Bribery Case, Reuters, (Sept. 30, 2016), https://www.reuters.com/article/us-sec-glaxosmithkline-corruption-idUSKCN1202F3.
 Minaya, supra note 1.
 15 U.S.C. 78dd.
 Lynch, supra note 3.