LVS: WAITING GAME

What’s the chance that LVS gets prosecuted?

LVS shares continue to be pressured by the potential ramifications of the SEC/DoJ investigation into the company’s compliance with the Foreign Corrupt Practices Act (FCPA).  As Adelson wonders how much more hair and money he will lose over this matter, we checked in on stats from some of the past high-profile FCPA cases. 

In 2010, there were 23 FCPA investigations that resulted in enforcement actions.  This translates into a roughly 20% hit rate. 48%, 28%, and 18% of estimated ongoing FCPA investigations resulted in prosecution in 2007, 2008, and 2009, respectively.  The number of cases have more than tripled since 2007.

As the table below shows, the settlement payments for the largest FCPA cases have risen significantly since 2008.  The penalty multiple placed on the alleged illegal money varies widely, although the guideline for 2010 was around 2x.  Moreover, many senior management members, including CEOs, are serving prison sentences.  We’re not saying Adelson is going to jail but as we wrote in LVS: IT’S NOT JUST ABOUT THE FINE (3/2/11), we believe the FCPA fine for LVS could be high, and more importantly could have deeper ramifications (e.g. forced exit from NV,PA; lost opportunities in new markets).

LVS: WAITING GAME - fcpa2