SEC Settles First SOX Case Filed Against a Foreign Issuer
On September 14, 2006, the SEC announced (here) a settlement of an enforcement action that it had filed against TV Azteca, S.A., a Mexican domiciled company, several related companies, and two TV Azteca officials, Chairman Ricardo Salinas Pilego and former CEO Pedro Padilla Longorio. According to press reports (here), Salinas Pilego is a Mexican media tycoon and a billionaire. Under the settlement, Salinas Pilego agree to pay $7,500,000 and Padilla Longorio agreed to pay $1 million to establish a Fair Fund (under Section 308 of the Sarbanes Oxley Act) to compensate affected investors. According to the company’s announcement (here), the settlement “does not involve economic consequences for TV Azteca."
The SEC filed its enforcement action (here) in January 2005, in connection with TV Azteca’s cellphone unit. A company owned by Salinas Pliego and a partner bought debt issued by the cellphone unit at a discount. The debt subsequently was redeemed at face value, permitting Salinas Pilego and his partner to make $109 million profit. Salinas Pilego did not reveal his involvement with the debt until it came to light following the resignation of TV Azteca’s U.S. law firm, which told the company's board of directors and management that it was resigning consistent with its obligations under Section 307 of the Sarbanes Oxley Act. Salinas Pilego and Padilla Longorio were alleged to have schemed to conceal Salinas Pilego’s involvement with the debt.