Legg Mason (LM) agreed to pay $64 million to settle U.S. Justice Department claims that the firm's Permal Group hedge fund business participated in a bribery scheme between French bank Societe Generale and the Libyan government, the agency said late Monday in a news release.
The money manager holding company admitted that Permal was a partner with Societe Generale in seeking business from Libyan state-owned companies from 2004 to 2010, the Justice Department said. During this time, the Justice Department said, "Societe Generale paid bribes through a Libyan broker in connection with 14 investments" made by the Libyan companies.
The French bank paid commissions ranging from 1.5% to 3% to the broker, of which seven transactions benefited Permal, which was managing assets for Libyan state institutions, the Justice Department said.
Through the transactions, the release said, Legg Mason earned about $32 million in profits.
Societe Generale pleaded guilty in U.S. District Court in New York to bribery charges and will pay $292.5 million each to the U.S. and French government in a settlement agreement announced earlier Monday.
Legg Mason's settlement involved a non-prosecutorial agreement, according to the Justice Department. It said Legg Mason cooperated in the federal investigation and its misconduct "involved only mid-to-lower-level employees" of Permal.
Also, "Societe Generale — and not Legg Mason or Permal — maintained the relationship with the Libyan broker and was responsible for originating and leading the scheme," according to the Justice Department release.
In a letter to shareholders on Legg Mason's website, Joseph Sullivan, chairman and CEO, said the company expects to reach "a settlement in principle" soon with the Securities and Exchange Commission staff regarding the bribery scheme charges and the company is "pleased to put the U.S. Department of Justice portion of this matter behind us."
In 2016, Legg Mason combined Permal with EnTrust Capital to form EnTrustPermal.