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| FALC > SEC Filings for FALC > Form 8-K on 27-Jun-2012 | All Recent SEC Filings |
27-Jun-2012
Entry into a Material Definitive Agreement, Other Events, Financial State
On June 27, 2012, as part of a settlement of an investigation into improper payments made to a customer, FalconStor Software, Inc. (the "Company"), entered into a Deferred Prosecution Agreement (the "DPA") with the United States Attorney's Office for the Eastern District of New York ("USAO").
Under the DPA, the USAO agrees that it will defer prosecution of the Company in connection with the matter, and ultimately not prosecute the Company if the Company satisfies its obligations during the 18 month term of the DPA. Under the DPA, the Company will forfeit $2.9 million to the United States. The Company must pay $1.16 million to the United States no later than July 27, 2012, and an additional $1.74 million to the United States no later than December 27, 2013.
The Company simultaneously entered into a settlement with the Securities and Exchange Commission ("SEC"). The Company agreed with the SEC to the entry of a Consent Judgment (CJ) to settle a civil action filed by the SEC. Pursuant to the CJ, the Company agreed not to violate the anti-fraud and registration provisions of Sections 17(a)(2), 5(a) and 5(c) of the Securities Act of 1933, and the books and records provisions of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended. The Company further agreed to pay a civil penalty of $2.9 million to the SEC payable within ten days of entry of the CJ.
On June 27, 2012, the Company issues a press release announcing the settlements described in Item 1.01. These parallel settlements resolve the government's investigations into improper payments made to a FalconStor customer. The agreed-upon payments to settle these investigations total $5.8 million, for which the Company has previously reserved within its consolidated financial statements.
The DPA acknowledges the remedial actions taken by the Company in response to its discovery of the improper payments and does not require the Company to make any additional control or compliance changes. Under the DPA, the Company will forfeit $2.9 million over eighteen months, of the $5.8 million combined settlement payments.
(d) Exhibits.
Exhibit No. Description
99.1 Press release of the Company dated June 27, 2012.
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