Juniper Networks Inc. (JNPR:US) fell the most in more than three months after disclosing that it’s being investigated for possible violations of the U.S. Foreign Corrupt Practices Act.
The shares fell 5.6 percent to $20.92 at the close in New York, the biggest decline since April 24. The U.S. Securities and Exchange Commission and the Department of Justice are both conducting investigations, the Sunnyvale, California-based company disclosed in a filing yesterday.
Juniper, the No. 2 maker of networking equipment, generated more than half of its sales outside the U.S. in 2012, according to data (JNPR:US) compiled by Bloomberg. The Foreign Corrupt Practices Act prohibits U.S. companies from paying bribes to foreign officials to win business. The company is cooperating with the investigations and “can’t predict the scope or duration,” said Michael Busselen, a spokesman for Juniper.
John Nester, a spokesman for the SEC, and Peter Carr, a Justice Department spokesman, declined to comment.
In many instances, companies are investigated under the FCPA because distributors or resellers don’t have strong internal controls to prevent bribery, according to Jayson Noland, an analyst at Robert W. Baird & Co. in San Francisco.
“It can get a little messy on who’s selling to who,” Noland, who has a neutral rating on the shares, said in an interview. “Maybe with Juniper there’s a carrier involved.”
Juniper’s biggest customer outside the U.S. is China Mobile Ltd., according to supply-chain data (JNPR:US) compiled by Bloomberg. The company, along with VST Holdings Ltd. (856) in Hong Kong and Deutsche Telekom AG (DTE), accounts for about 10 percent of Juniper’s revenue.
Other large technology companies have dealt with similar investigations in recent years.
Oracle Corp. (ORCL:US), the largest maker of database software, agreed last year to pay $2 million to settle SEC claims that it violated FCPA by failing to prevent a subsidiary from secretly setting aside money off the company’s books that was used to make unauthorized payments to phony vendors in India.
International Business Machines Corp. (IBM:US) in 2011 agreed to pay $10 million to settle charges that it violated the FCPA by paying bribes to officials in South Korea and China. In 2010, the U.S. Justice Department and SEC joined a probe by German prosecutors as to whether Hewlett-Packard Co. (HPQ:US) employees engaged in bribery, embezzlement and tax evasion in Russia.
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