Securities Class Actions

Foreign Corrupt Practices Violations: Avon Products, Inc.

No longer accepting claims for this case

When laws are broken by companies and scandals are revealed, shareholders and institutional investors often find themselves losing money from an investment they likely wouldn’t have made had they been provided all the facts.

Motley Rice represented the lead plaintiffs and was appointed sole lead counsel in the class action suit City of Brockton Retirement Systems v. Avon Products, Inc., filed in the Southern District of New York for investors who acquired Avon common stock during the class period of July 21, 2006 through October 26, 2011.


Aug. 24, 2016

U.S. District Judge Paul Gardephe for the Southern District of New York granted final approval of a $62 million settlement reached with Avon Products, Inc., to resolve shareholder claims that the company falsely inflated stock prices by failing to disclose alleged violations of the Foreign Corrupt Practices Act.

Avon Products Litigation

Cosmetics manufacturer Avon is based in New York and distributes its products worldwide. Allegations were raised, however, in October 2011 that the company falsely inflated its stock prices by failing to disclose alleged Foreign Corrupt Practices Act violations. That statute strengthened anti-bribery provisions to ensure transparency in foreign deals.

Litigation filed against Avon by affected shareholders alleged the company falsely assured investors that it had effective safeguards in place to ensure compliance with the law, when in reality “Avon’s employees were engaged in widespread corrupt practices in emerging markets.” A Securities and Exchange Commission investigation into alleged violations of the FCPA committed by Avon’s China subsidiary revealed that the company had concealed more than $8 million in gifts given to Chinese officials. Avon China pleaded guilty in 2014 to conspiring to violate the FCPA, and as punishment agreed to compliance monitoring and supervision in addition to paying $135 million in fines to the U.S. Department of Justice and the SEC.

Avon’s misconduct is alleged to have included the payment of bribes to foreign officials to obtain business benefits as far back as 2004. Avon disclosed in 2008 that it was conducting an internal investigation into possible FCPA violations in China, but shareholders alleged the misconduct continued. News that the SEC had begun its own investigation in 2011 caused Avon’s share price to plummet, shareholders alleged.  

In October 2012, Avon filed a motion to dismiss litigation filed by shareholders, which was granted by the Court. The Plaintiffs filed an amended complaint in October 2014, and Avon agreed the following year to pay $62 million to resolve the claims in City of Brockton Retirement Systems v. Avon Products, Inc. The Court granted final approval of the settlement August 24, 2016.

News Coverage

Law360 (Aug. 18, 2015) — Avon Pays $62M To End Investors’ FCPA Suit
Reuters (Dec. 17, 2014)Avon China unit pleads guilty to bribery in $135 million accord
The Guardian (Oct. 27, 2011)SEC investigates allegations that Avon reps bribed foreign officials
Reuters (April 13, 2010)Avon suspends four execs in China bribery probe