and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities

 
 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 98222 / August 25, 2023 
 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 4450 / August 25, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21581 
 
 
In the Matter of 
 
3M COMPANY,  
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER  
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 (“Exchange Act”), against 3M Company (“3M” or “Respondent”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   
 
 
 
 

 2 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
SUMMARY 
 
1. This matter concerns violations of the books and records and internal accounting 
control provisions of the Foreign Corrupt Practices Act (“FCPA”) by 3M resulting from conduct 
by one of its China-based subsidiaries, 3M-China Ltd. (“3M-China”) from at least 2014 to 2018 
(the “Relevant Period”).  During that time, employees of 3M-China arranged for Chinese health 
care officials (“Chinese Government Officials” or “Officials”) employed by its state-owned entity 
customers (“SOE Customers”) to attend overseas conferences, educational events, and health care 
facility visits (collectively, the “Educational Events”) ostensibly as part of 3M-China’s marketing 
and outreach efforts, but that in fact were often a pretext to provide overseas travel, sightseeing and 
entertainment (“Tourism Activities”) to the Officials to obtain and retain business from the SOE 
Customers.  As part of the scheme, funds were transferred to a complicit China-based travel 
agency and were improperly used by 3M-China and the China-based travel agency to help pay for 
the Tourism Activities.   
 
2. In violation of the books and records provisions of the Exchange Act, the  overseas 
travel and Tourism Activities were improperly recorded by 3M-China as legitimate business 
expenses and then consolidated into 3M’s books and records, rendering them inaccurate.  Also, in 
violation of the internal accounting controls provisions of the Exchange Act, 3M failed to devise 
and maintain an adequate system of internal accounting controls over the cross-border transfer of 
funds to vendors, which helped facilitate the scheme. 
 
RESPONDENT 
 
3. 3M Company is a global manufacturer of products and services headquartered in 
St. Paul, Minnesota.  3M’s common stock is registered with the Commission pursuant to Section 
12(b) of the Exchange Act and trades on the New York Stock Exchange under the Ticker “MMM.”  
3M files periodic reports, including Forms 10-K and 10-Q, with the Commission pursuant to 
Section 13(a) of the Exchange Act and related rules thereunder. 
 
FACTS 
 
3M-China Improperly Funded Tourism Activities for Chinese Government Officials 
 
4. During the Relevant Period, a former 3M-China marketing manager (the 
“Marketing Manager”) colluded with two China-based travel agencies (the “China Travel 
 
1
  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 
binding on any other person or entity in this or any other proceeding.   
 
 

 3 
Agencies”) to secretly provide Tourism Activities for Chinese Government Officials during 
Educational Events.  The Marketing Manager was aided in the scheme by several employees in 
3M-China’s sales, marketing and professional services departments.     
 
5. The Marketing Manager and 3M-China employees (collectively, the “3M-China 
Employees”) targeted influential Officials of SOE Customers for attendance at overseas 
Educational Events and, in collusion with the China Travel Agencies, they would create a travel 
itinerary that included various legitimate business, training and marketing activities for submission 
to 3M-China’s compliance personnel for approval.  The alternate itineraries (the “Alternate 
Itineraries”) planned by 3M-China Employees and the China Travel Agencies consisted of various 
Tourism Activities at or near the location of the Educational Events and were provided to the 
relevant Chinese Government Officials.  Provision of the activities in the Alternate Itinerary were 
designed to improperly induce the Officials to purchase 3M products, and violated company 
policy.     
 
6. The 3M-China Employees circulated the Alternate Itineraries through hand delivery 
or personal WeChat accounts and asked the participants to keep the agenda hidden, and falsified 
internal compliance documents that affirmatively denied and/or omitted mention of the Tourism 
Activities that were planned as part of the overseas trip. 
 
7. In a number of instances the Tourism Activities were the primary reason for the 
overseas trip.  For example: (a)  Tourism Activities were scheduled at the same time as the 
Educational Event activities; (b) the ostensibly Educational Events were in English, and the trips 
included Chinese Government Officials who neither understood English nor had adequate 
translation services; and (c) at times Chinese Government Officials missed whole days of the 
Educational Event or simply never attended at all.  Certain Chinese Government Officials also 
requested Tourism Activities as part of the overseas trip.   
  
8. During the Relevant Period, 3M-China sent Chinese Government Officials on at 
least 24 overseas Educational Events that included Tourism Activities.  3M-China Employees also 
accompanied the Chinese Government Officials on the Tourism Activities.  The Educational 
Events were held at tourist destinations and the Tourism Activities included guided tours, shopping 
visits, day trips to nearby sites and other leisure activities, all of which were detailed in the 
Alternate Itineraries.  Examples of these trips include: 
 
• 2017, St. Paul, MN, Nashville, TN, and Los Angeles, CA. This nine-day trip included 
eleven Chinese Government Officials.  While the official agenda had Educational 
Event activities for each day of the trip, the Alternate Itinerary had only one day of 
Educational Event activities, with most of the remaining days scheduled with Tourism 
Activities.  3M-China employees accompanied the Officials on the Tourism Activities 
and at least some of the Officials did not understand English and were not provided 
interpreters.    
 
• 2017, Boston, MA and St. Paul, MN:  This seven-day trip included twelve Chinese 
Government Officials.  While the official 3M-China agenda had Educational Event 

 4 
activities for each day, the Alternate Itinerary had primarily Tourism Activities.  At 
least some of the Chinese Government Officials did not understand English, 
interpreters were not provided, and the Chinese Government Officials mostly 
participated in Tourism Activities rather than attend the Educational Events.   
 
• 2016, Chicago, IL.  This eight-day trip included five Chinese Government Officials, 
two of whom were accompanied by their spouses.  One Official and his spouse left 
Chicago in the evening after the Educational Event started and returned after the Event 
had ended in order to participate in Tourism Activities.  Another Official attended one 
day of the Educational Event, then left Chicago and never returned.  Three other 
Chinese Government Officials participated in full days of Tourism Activities nearly 
every day of the scheduled Educational Event activities.  The Officials were not seen at 
the Educational Event activities and did not attend a dinner that 3M had organized for 
them. 
 
• 2016, Brisbane & Sydney, Australia.  This eight-day trip included four Chinese 
Government Officials.  While the official 3M-China agenda had Educational Event 
activities scheduled for each non-travel day of the trip, the Alternate Itinerary only 
scheduled two half-days for Educational Event activities, with the bulk of the time 
scheduled for Tourism Activities.  At least some of the Chinese Government Officials 
did not understand English, were not provided interpreters, and joined the Tourism 
Activities for entire days rather than attending the conference. 
 
9. In order to cover certain of their own non-reimbursable expenses related to Tourism 
Activites, 3M-China Employees would at times work with the collusive China Travel Agencies to 
inflate their billing invoices for ostensibly legitimate, line item expenses (e.g. travel costs).  In 
other instances, the 3M-China Employees submitted unpermitted invoices directly to the China 
Travel Agencies for reimbursement.  In addition, the China Travel Agencies, with the support of 
the 3M-China Employees, at times directed that 3M-China’s distributors pay for portions of the 
non-reimburseable expenses. 
 
10. 3M-China Employees measured the impact that the provision of overseas 
Educational Activities had on sales.  Certain 3M-China Employees tracked the effect of providing 
overseas Educational Events to Chinese Government Officials on 3M-China’s sales to SOE 
Customers.  One 3M-China Employee tracked post-trip sales to the SOE Customer to ensure they 
were consistent with 3M-China’s sales goals.  3M-China management asked for the “return on 
investment” from an Educational Event (i.e. the effect of providing health care officials with 
overseas travel on sales to the SOE Customer) by comparing sales figures before and after an 
Educational Event.   
 
11. From at least 2014 through 2017, 3M-China paid nearly $1 million to fund at least 
24 trips for Chinese Government Officials that included Tourism Activities.  The costs of these 
trips were improperly recorded in 3M’s books and records as legitimate business expenses, without 
any indication that they included Tourism Activities.  As a result of the above conduct, 3M 
improperly benefited by at least $3.5 million from increased sales.   

 5 
3M Provided Funds to a China Travel Agency that was Used to Pay for 
Improper Tourism Activities 
 
12. As part of their scheme, 3M-China Employees arranged for 3M to directly provide 
funds to one of the China Travel Agencies, which it then improperly used to offset some of the 
costs of the Tourism Activities.  3M-China lacked oversight over the use of these funds: the funds 
were not allocated for particular projects, but would be distributed at the discretion of the China 
Travel Agency and the 3M-China Employees.  
 
13. 3M’s records indicate that between February 2016 and September 2018, 3M made 
15 transfers totaling $254,000 to the China Travel Agency for vaguely described “marketing” 
efforts.  3M had insufficient controls over the fund transfers, which did not adequately describe the 
purpose or uses of the funds.   
 
LEGAL STANDARDS AND FCPA VIOLATIONS 
14. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-
and-desist order upon any person who is violating, has violated, or is about to violate any provision 
of the Exchange Act or any regulation thereunder, and upon any other person that is, was, or would 
be a cause of the violation, due to an act or omission the person knew or should have known would 
contribute to such violation. 
 
3M Violated Exchange Act Section 13(b)(2)(A) 
 
15. The books and records provision of the FCPA, Section 13(b)(2)(A) of the Exchange 
Act, requires every issuer with a class of securities registered pursuant to Section 12 of the 
Exchange Act to make and keep books, records, and accounts, which, in reasonable detail, 
accurately and fairly reflect the transactions and dispositions of the assets of the issuer. 15 U.S.C. § 
78m(b)(2)(A).  As a result of the conduct described above, 3M violated Exchange Act Section 
13(b)(2)(A).  
 
3M Violated Exchange Act Section 13(b)(2)(B) 
 
16. Section 13(b)(2)(B) of the Exchange Act requires companies with a class of 
securities registered under Section 12 of the Exchange Act to devise and maintain a system of 
internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 
executed in accordance with management’s general or specific authorization; (ii) transactions are 
recorded as necessary (I) to permit preparation of financial statements in conformity with generally 
accepted accounting principles or any other criteria applicable to such statements, and (II) to 
maintain accountability for assets; (iii) access to assets is permitted only in accordance with 
management’s general or specific authorization; and (iv) the recorded accountability for assets is 
compared with the existing assets at reasonable intervals and appropriate action is taken with 
respect to any differences. 15 U.S.C. § 78m(b)(2)(B).  As a result of the conduct described above, 
3M violated Exchange Act Section 13(b)(2)(B). 
 

 6 
DISGORGEMENT AND CIVIL PENALTIES 
 
17. The disgorgement and prejudgment interest ordered in section IV. is consistent 
with equitable principles, does not exceed Respondent’s net profits from its violations, and 
returning the money to Respondent would be inconsistent with equitable principles. Therefore, in 
these circumstances, distributing disgorged funds to the U.S. Treasury is the most equitable 
alternative. The disgorgement and prejudgment interest ordered in Section IV. shall be 
transferred to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange 
Act.   
  
3M’S  SELF-REPORTING, COOPERATION AND REMEDIAL EFFORTS 
 
18. In determining to accept the Offer, the Commission considered 3M’s self-reporting, 
cooperation and remedial efforts.  3M promptly self-reported the misconduct after first learning of 
it.  The company’s cooperation included making witnesses available for interviews, voluntarily 
producing translations of relevant documents, sharing facts uncovered during its internal 
investigation – including notes of witness interviews – and providing comprehensive, periodic 
updates on its investigation.  3M also undertook significant remedial measures, including 
disciplining and/or terminating involved employees, terminating its relationship with the China 
Travel Agencies, and further enhancements to its internal controls environment and compliance 
program including additional controls over is cross-border fund transfers. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent 3M’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
 
 A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 
committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 
13(b)(2)(B) of the Exchange Act.   
 
B. Respondent shall, within 14 days of the entry of this Order, pay disgorgement of 
$3,538,897 and prejudgment interest of $1,042,721 and a civil money penalty in the amount of 
$2,000,000 to the Securities and Exchange Commission for transfer to the general fund of the 
United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not 
made, additional interest shall accrue pursuant to SEC Rule of Practice 600 and 31 U.S.C §3717.  
Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 7 
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 3M 
as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to Charles Cain, Chief, FCPA Unit, Division of 
Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549.   
 
 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 
 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 98222 / August 25, 2023 

 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 4450 / August 25, 2023 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21581 

 

 

In the Matter of 

 

3M COMPANY,  

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER  

  

I. 

 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”), against 3M Company (“3M” or “Respondent”).   

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making 

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   

 

 

 

 



 2 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that:  

 

SUMMARY 

 

1. This matter concerns violations of the books and records and internal accounting 

control provisions of the Foreign Corrupt Practices Act (“FCPA”) by 3M resulting from conduct 

by one of its China-based subsidiaries, 3M-China Ltd. (“3M-China”) from at least 2014 to 2018 

(the “Relevant Period”).  During that time, employees of 3M-China arranged for Chinese health 

care officials (“Chinese Government Officials” or “Officials”) employed by its state-owned entity 

customers (“SOE Customers”) to attend overseas conferences, educational events, and health care 

facility visits (collectively, the “Educational Events”) ostensibly as part of 3M-China’s marketing 

and outreach efforts, but that in fact were often a pretext to provide overseas travel, sightseeing and 

entertainment (“Tourism Activities”) to the Officials to obtain and retain business from the SOE 

Customers.  As part of the scheme, funds were transferred to a complicit China-based travel 

agency and were improperly used by 3M-China and the China-based travel agency to help pay for 

the Tourism Activities.   

 

2. In violation of the books and records provisions of the Exchange Act, the  overseas 

travel and Tourism Activities were improperly recorded by 3M-China as legitimate business 

expenses and then consolidated into 3M’s books and records, rendering them inaccurate.  Also, in 

violation of the internal accounting controls provisions of the Exchange Act, 3M failed to devise 

and maintain an adequate system of internal accounting controls over the cross-border transfer of 

funds to vendors, which helped facilitate the scheme. 

 

RESPONDENT 

 

3. 3M Company is a global manufacturer of products and services headquartered in 

St. Paul, Minnesota.  3M’s common stock is registered with the Commission pursuant to Section 

12(b) of the Exchange Act and trades on the New York Stock Exchange under the Ticker “MMM.”  

3M files periodic reports, including Forms 10-K and 10-Q, with the Commission pursuant to 

Section 13(a) of the Exchange Act and related rules thereunder. 

 

FACTS 

 

3M-China Improperly Funded Tourism Activities for Chinese Government Officials 

 

4. During the Relevant Period, a former 3M-China marketing manager (the 

“Marketing Manager”) colluded with two China-based travel agencies (the “China Travel 

 
1  The findings herein are made pursuant to Respondent's Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding.   

 

 



 3 

Agencies”) to secretly provide Tourism Activities for Chinese Government Officials during 

Educational Events.  The Marketing Manager was aided in the scheme by several employees in 

3M-China’s sales, marketing and professional services departments.     

 

5. The Marketing Manager and 3M-China employees (collectively, the “3M-China 

Employees”) targeted influential Officials of SOE Customers for attendance at overseas 

Educational Events and, in collusion with the China Travel Agencies, they would create a travel 

itinerary that included various legitimate business, training and marketing activities for submission 

to 3M-China’s compliance personnel for approval.  The alternate itineraries (the “Alternate 

Itineraries”) planned by 3M-China Employees and the China Travel Agencies consisted of various 

Tourism Activities at or near the location of the Educational Events and were provided to the 

relevant Chinese Government Officials.  Provision of the activities in the Alternate Itinerary were 

designed to improperly induce the Officials to purchase 3M products, and violated company 

policy.     

 

6. The 3M-China Employees circulated the Alternate Itineraries through hand delivery 

or personal WeChat accounts and asked the participants to keep the agenda hidden, and falsified 

internal compliance documents that affirmatively denied and/or omitted mention of the Tourism 

Activities that were planned as part of the overseas trip. 

 

7. In a number of instances the Tourism Activities were the primary reason for the 

overseas trip.  For example: (a)  Tourism Activities were scheduled at the same time as the 

Educational Event activities; (b) the ostensibly Educational Events were in English, and the trips 

included Chinese Government Officials who neither understood English nor had adequate 

translation services; and (c) at times Chinese Government Officials missed whole days of the 

Educational Event or simply never attended at all.  Certain Chinese Government Officials also 

requested Tourism Activities as part of the overseas trip.   

  

8. During the Relevant Period, 3M-China sent Chinese Government Officials on at 

least 24 overseas Educational Events that included Tourism Activities.  3M-China Employees also 

accompanied the Chinese Government Officials on the Tourism Activities.  The Educational 

Events were held at tourist destinations and the Tourism Activities included guided tours, shopping 

visits, day trips to nearby sites and other leisure activities, all of which were detailed in the 

Alternate Itineraries.  Examples of these trips include: 

 

• 2017, St. Paul, MN, Nashville, TN, and Los Angeles, CA. This nine-day trip included 

eleven Chinese Government Officials.  While the official agenda had Educational 

Event activities for each day of the trip, the Alternate Itinerary had only one day of 

Educational Event activities, with most of the remaining days scheduled with Tourism 

Activities.  3M-China employees accompanied the Officials on the Tourism Activities 

and at least some of the Officials did not understand English and were not provided 

interpreters.    

 

• 2017, Boston, MA and St. Paul, MN:  This seven-day trip included twelve Chinese 

Government Officials.  While the official 3M-China agenda had Educational Event 



 4 

activities for each day, the Alternate Itinerary had primarily Tourism Activities.  At 

least some of the Chinese Government Officials did not understand English, 

interpreters were not provided, and the Chinese Government Officials mostly 

participated in Tourism Activities rather than attend the Educational Events.   

 

• 2016, Chicago, IL.  This eight-day trip included five Chinese Government Officials, 

two of whom were accompanied by their spouses.  One Official and his spouse left 

Chicago in the evening after the Educational Event started and returned after the Event 

had ended in order to participate in Tourism Activities.  Another Official attended one 

day of the Educational Event, then left Chicago and never returned.  Three other 

Chinese Government Officials participated in full days of Tourism Activities nearly 

every day of the scheduled Educational Event activities.  The Officials were not seen at 

the Educational Event activities and did not attend a dinner that 3M had organized for 

them. 

 

• 2016, Brisbane & Sydney, Australia.  This eight-day trip included four Chinese 

Government Officials.  While the official 3M-China agenda had Educational Event 

activities scheduled for each non-travel day of the trip, the Alternate Itinerary only 

scheduled two half-days for Educational Event activities, with the bulk of the time 

scheduled for Tourism Activities.  At least some of the Chinese Government Officials 

did not understand English, were not provided interpreters, and joined the Tourism 

Activities for entire days rather than attending the conference. 

 

9. In order to cover certain of their own non-reimbursable expenses related to Tourism 

Activites, 3M-China Employees would at times work with the collusive China Travel Agencies to 

inflate their billing invoices for ostensibly legitimate, line item expenses (e.g. travel costs).  In 

other instances, the 3M-China Employees submitted unpermitted invoices directly to the China 

Travel Agencies for reimbursement.  In addition, the China Travel Agencies, with the support of 

the 3M-China Employees, at times directed that 3M-China’s distributors pay for portions of the 

non-reimburseable expenses. 

 

10. 3M-China Employees measured the impact that the provision of overseas 

Educational Activities had on sales.  Certain 3M-China Employees tracked the effect of providing 

overseas Educational Events to Chinese Government Officials on 3M-China’s sales to SOE 

Customers.  One 3M-China Employee tracked post-trip sales to the SOE Customer to ensure they 

were consistent with 3M-China’s sales goals.  3M-China management asked for the “return on 

investment” from an Educational Event (i.e. the effect of providing health care officials with 

overseas travel on sales to the SOE Customer) by comparing sales figures before and after an 

Educational Event.   

 

11. From at least 2014 through 2017, 3M-China paid nearly $1 million to fund at least 

24 trips for Chinese Government Officials that included Tourism Activities.  The costs of these 

trips were improperly recorded in 3M’s books and records as legitimate business expenses, without 

any indication that they included Tourism Activities.  As a result of the above conduct, 3M 

improperly benefited by at least $3.5 million from increased sales.   



 5 

3M Provided Funds to a China Travel Agency that was Used to Pay for 

Improper Tourism Activities 

 

12. As part of their scheme, 3M-China Employees arranged for 3M to directly provide 

funds to one of the China Travel Agencies, which it then improperly used to offset some of the 

costs of the Tourism Activities.  3M-China lacked oversight over the use of these funds: the funds 

were not allocated for particular projects, but would be distributed at the discretion of the China 

Travel Agency and the 3M-China Employees.  

 

13. 3M’s records indicate that between February 2016 and September 2018, 3M made 

15 transfers totaling $254,000 to the China Travel Agency for vaguely described “marketing” 

efforts.  3M had insufficient controls over the fund transfers, which did not adequately describe the 

purpose or uses of the funds.   

 

LEGAL STANDARDS AND FCPA VIOLATIONS 

14. Under Section 21C(a) of the Exchange Act, the Commission may impose a cease-

and-desist order upon any person who is violating, has violated, or is about to violate any provision 

of the Exchange Act or any regulation thereunder, and upon any other person that is, was, or would 

be a cause of the violation, due to an act or omission the person knew or should have known would 

contribute to such violation. 

 

3M Violated Exchange Act Section 13(b)(2)(A) 

 

15. The books and records provision of the FCPA, Section 13(b)(2)(A) of the Exchange 

Act, requires every issuer with a class of securities registered pursuant to Section 12 of the 

Exchange Act to make and keep books, records, and accounts, which, in reasonable detail, 

accurately and fairly reflect the transactions and dispositions of the assets of the issuer. 15 U.S.C. § 

78m(b)(2)(A).  As a result of the conduct described above, 3M violated Exchange Act Section 

13(b)(2)(A).  

 

3M Violated Exchange Act Section 13(b)(2)(B) 

 

16. Section 13(b)(2)(B) of the Exchange Act requires companies with a class of 

securities registered under Section 12 of the Exchange Act to devise and maintain a system of 

internal accounting controls sufficient to provide reasonable assurances that (i) transactions are 

executed in accordance with management’s general or specific authorization; (ii) transactions are 

recorded as necessary (I) to permit preparation of financial statements in conformity with generally 

accepted accounting principles or any other criteria applicable to such statements, and (II) to 

maintain accountability for assets; (iii) access to assets is permitted only in accordance with 

management’s general or specific authorization; and (iv) the recorded accountability for assets is 

compared with the existing assets at reasonable intervals and appropriate action is taken with 

respect to any differences. 15 U.S.C. § 78m(b)(2)(B).  As a result of the conduct described above, 

3M violated Exchange Act Section 13(b)(2)(B). 

 



 6 

DISGORGEMENT AND CIVIL PENALTIES 

 

17. The disgorgement and prejudgment interest ordered in section IV. is consistent 

with equitable principles, does not exceed Respondent’s net profits from its violations, and 

returning the money to Respondent would be inconsistent with equitable principles. Therefore, in 

these circumstances, distributing disgorged funds to the U.S. Treasury is the most equitable 

alternative. The disgorgement and prejudgment interest ordered in Section IV. shall be 

transferred to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange 

Act.   

  

3M’S  SELF-REPORTING, COOPERATION AND REMEDIAL EFFORTS 

 

18. In determining to accept the Offer, the Commission considered 3M’s self-reporting, 

cooperation and remedial efforts.  3M promptly self-reported the misconduct after first learning of 

it.  The company’s cooperation included making witnesses available for interviews, voluntarily 

producing translations of relevant documents, sharing facts uncovered during its internal 

investigation – including notes of witness interviews – and providing comprehensive, periodic 

updates on its investigation.  3M also undertook significant remedial measures, including 

disciplining and/or terminating involved employees, terminating its relationship with the China 

Travel Agencies, and further enhancements to its internal controls environment and compliance 

program including additional controls over is cross-border fund transfers. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent 3M’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

 

 A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 

committing or causing any violations and any future violations of Sections 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act.   

 

B. Respondent shall, within 14 days of the entry of this Order, pay disgorgement of 

$3,538,897 and prejudgment interest of $1,042,721 and a civil money penalty in the amount of 

$2,000,000 to the Securities and Exchange Commission for transfer to the general fund of the 

United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely payment is not 

made, additional interest shall accrue pursuant to SEC Rule of Practice 600 and 31 U.S.C §3717.  

Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

http://www.sec.gov/about/offices/ofm.htm


 7 

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 3M 

as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to Charles Cain, Chief, FCPA Unit, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549.   

 

 D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary