In re STRYKER CORPORATION

 
 
 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 84308 / September 28, 2018 
ACCOUNTING AND AUDITING ENFORCEMENT 
Release No. 3990 / September 28, 2018 
ADMINISTRATIVE PROCEEDING 
File No. 3-18853 
 
In the Matter of 
 
STRYKER CORPORATION 
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING REMEDIAL 
SANCTIONS AND 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 Stryker Corporation (“Stryker” 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 Remedial Sanctions and a Cease-and-Desist Order (“Order”), as 
set forth below. 
 
 
 

 
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III. 
On the basis of this Order and Respondent’s Offer, the Commission finds that: 
Summary  
1. This matter concerns violations of the books and records and internal accounting 
controls provisions of the Exchange Act by Stryker, a global leader in the medical technology 
industry, related to its operations in India, China, and Kuwait. 
2. Stryker’s policies, which applied to its global operations, prohibit bribery and 
other improper payments.  As part of its internal accounting controls, the company had policies, 
which applied to its subsidiaries, requiring, among other things, proper documentation of 
transactions; written agreements with distributors and sub-distributors that included anti-
corruption provisions and review rights to determine compliance; and due diligence and approval 
of, and anti-corruption training for, all distributors and sub-distributors.   
India 
3. From at least 2010 through 2015, Stryker’s wholly-owned subsidiary in India 
(“Stryker India”) failed to keep and maintain any documentation with respect to 27% of the 
transactions tested in an internal forensic review that targeted Stryker India’s high-risk and 
compliance-sensitive accounts and payments during the relevant period. Additionally, the 
forensic review found missing or inaccurate documentation for numerous other transactions 
flagged as high-risk, including expenses related to consulting fees, travel, and other benefits to 
health-care professionals (“HCPs”) in India. 
4. The sales transactions here involved Stryker India’s sales of orthopedic products 
to dealers, which subsequently sold the products to certain private hospitals. Stryker India 
authorized these dealer transactions only after Stryker India’s management negotiated and 
approved the price that the hospitals would pay to the dealers. Thus, in determining the price 
charged to dealers, Stryker India’s management and the dealers specifically negotiated the profit 
margin such dealers would stand to earn based on the difference between what hospitals paid the 
dealers and what the dealers paid Stryker India. Furthermore, all such transactions were 
governed by Stryker India’s policy of prohibiting dealers from making, requesting, or accepting 
any “improper payments to government or non-government officials, employees, or entities.” 
5. During the relevant period, certain of Stryker India’s dealers regularly issued 
“inflated invoices” upon the request of certain private hospitals. The private hospitals that 
requested inflated invoices from dealers profited from their purchase of Stryker orthopedic 
products by passing on the higher (invoiced) prices to their patients or their patients’ insurers, 
even as the hospitals paid the lower prices previously negotiated with Stryker India to Stryker 
India’s dealers. Stryker received internal complaints of this practice and uncovered evidence of 
such overbilling by one dealer when it conducted audits of three dealers in 2012. Yet Stryker 
failed to devise and maintain a system of internal accounting controls sufficient to detect, 
address, and prevent this widespread practice at the dealer level, which violated Stryker’s own 
policies governing the activities of Stryker India’s dealers. 

 
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China 
6. In China, Stryker operates through a wholly-owned subsidiary (“Stryker China”) 
that sells its Sonopet ultrasonic aspirator, as well as other products, through distributors.  From 
2015 through 2017, at least 21 sub-distributors of Stryker’s Sonopet product in China were not 
vetted, approved, or trained, as required by Stryker’s policies.  At times, Stryker China 
employees worked directly with these unauthorized sub-distributors, and at other times 
installation records were falsified to hide the involvement of the unauthorized sub-distributors in 
the sale of Sonopet products.  Stryker had in place certain internal accounting controls relating to 
third parties that limited transactions to those that complied with their contractual undertakings 
to adhere to Stryker’s anti-corruption policies and procedures.  The use of these unauthorized 
sub-distributors increased the risk of improper payments in connection with the sale of Stryker 
products.  Stryker failed to sufficiently implement its policies to detect and prevent the use of 
these unauthorized sub-distributors in China. 
Kuwait  
7. EMEA Supply Chain Services B.V. is a wholly-owned subsidiary of Stryker 
based in the Netherlands.  From an office located in Dubai, employees of this subsidiary oversee 
sales by Stryker's distributors in Kuwait.  Until 2018, Stryker had one primary distributor in 
Kuwait (the “Kuwait Distributor”) that sold Stryker orthopedic products to the Kuwait Ministry 
of Health.  From 2015 through 2017, the Kuwait Distributor made over $32,000 in improper “per 
diem” payments to Kuwaiti HCPs to attend Stryker events, when Stryker had directly paid the 
costs for lodging, meals, and local transportation for these individuals.  Stryker had in place 
certain internal accounting controls relating to third parties that limited transactions to those that 
complied with their contractual undertakings to adhere to Stryker’s anti-corruption policies and 
procedures.  Stryker failed to sufficiently implement policies to test or otherwise assess whether 
the Kuwait Distributor would allow the company to exercise its audit right to review records, and 
whether it was complying with the company’s policies prohibiting bribes and other improper 
payments by its distributors. 
8. Based on all of the above, Stryker violated Section 13(b)(2)(B) of the Exchange 
Act because it failed to devise and maintain, in its India, China, and Kuwait operations, a system 
of internal accounting controls sufficient to provide reasonable assurances that transactions were 
executed in accordance with management’s general or specific authorization, and that 
transactions were recorded as necessary to permit preparation of financial statements in 
conformity with generally accepted accounting principles and to maintain accountability for 
assets.  In addition, the failure to have internal accounting controls that ensured proper 
documentation of transactions involving Stryker India, described above, caused Stryker to 
violate Section 13(b)(2)(A) of the Exchange Act because its books and records did not, in 
reasonable detail, accurately or fairly reflect the transactions and dispositions of the assets of 
Stryker. 
Respondent  
9. Stryker is a Michigan corporation with its principal executive offices in 
Kalamazoo, Michigan.  Its common stock is registered with the Commission pursuant to Section 

 
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12(b) of the Exchange Act and is listed on the New York Stock Exchange under the symbol 
“SYK.” Stryker manufactures and distributes medical devices and products in more than 100 
countries around the world, including India, China, and Kuwait. The financial results of sales 
made in these countries are consolidated into the financial statements of Stryker. 
Prior Commission Action 
10. On October 24, 2013, the SEC filed settled cease-and-desist proceedings against 
Stryker for violations of the books and records and internal accounting controls provisions of the 
Exchange Act.  The Commission order found that, from approximately August 2003 to February 
2008, through five wholly-owned subsidiaries, Stryker made approximately $2.2 million in 
unlawful payments to government employees, including public HCPs in Mexico, Poland, 
Romania, Argentina, and Greece.  In the company’s books and records, Stryker incorrectly 
described these unlawful payments to foreign officials as legitimate consulting and service 
contracts, travel expenses, charitable donations, or commissions, when in fact the payments were 
made by Stryker to obtain or retain business.  Stryker also failed to devise and maintain a system 
of internal accounting controls sufficient to provide reasonable assurance that the company 
maintained accountability for its assets and that transactions were executed in accordance with 
management’s authorization.  As a result of those payments, Stryker earned approximately $7.5 
million in illicit profits. 
11. In settling with the Commission, Stryker consented to the issuance of an order 
requiring it to cease-and-desist from any violations and any future violations of Sections 
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and to pay $7,502,635 in disgorgement, 
$2,280,888 in prejudgment interest, and a civil penalty of $3,500,000. 
Stryker India’s Business 
12. From at least 2010 through December 2015, Stryker sold its medical products in 
India through Stryker India, which generated approximately 85% of its revenues through sales to 
third-party dealers.  These dealers, in turn, sold Stryker products to end customers, primarily 
hospitals.  Approximately 85% of Stryker India’s end customers are hospitals in the private 
sector. 
13. Stryker’s policies required Stryker and its subsidiaries, including Stryker India, to 
maintain sufficient internal accounting controls.  Stryker India was also subject to Stryker’s code 
of conduct, which required, among other things, that Stryker India take steps to ensure that all 
payments made to government or non-government officials, employees, customers, and other 
persons and entities were proper.  Further, Stryker India was required to generate or obtain 
proper documentation to provide assurances that all transactions and business relationships with 
dealers, HCPs, consultants, and other third parties were legitimate. 
14. Stryker India entered into a contract with each dealer through which Stryker 
products were sold.  Pursuant to such contracts, Stryker India’s dealers were required to follow 
Stryker’s policies regarding the proper conduct of their business, which included a prohibition on 
making, requesting, or accepting any “improper payments to government or non-government 
officials, employees, or entities.” The contracts also obligated dealers to “maintain complete and 

 
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accurate records relating to [their] promotion, marketing, use and distribution of [Stryker] 
Products.”  Finally, under its contracts with dealers, Stryker India held audit rights to inspect the 
books and records of any of the 198 dealers through which Stryker products were sold in India. 
Stryker India’s Inadequate Oversight of Its Dealers 
15. In 2012, in response to allegations of misconduct concerning Stryker India’s 
dealers, Stryker exercised its audit rights over three dealers in India.  Those audits revealed 
insufficiencies in the financial record-keeping and internal accounting controls of all three 
dealers.  Additionally, Stryker identified suspicious expenses by one dealer and instances of 
another dealer over-billing a hospital upon the hospital’s request.  While Stryker took some 
corrective actions in response to these audits, including terminating one of the three dealers, the 
actions were limited to the three dealers audited.  
16. The above deficiencies violated Stryker India’s agreements with its dealers. 
Specifically, the deficiencies in dealers’ financial record-keeping violated dealers’ obligation to 
“maintain complete and accurate records relating to [their] promotion, marketing, use and 
distribution of [Stryker] Products,” and the over-billing violated Stryker’s business conduct 
policy prohibiting participation in any improper payments.  Despite the red flags raised during 
the 2012 audits, and numerous complaints reported to Stryker of dealer misconduct, Stryker did 
not act to determine the scope of dealer-inflated invoices until 2015. 
17. In 2015, Stryker performed audits of other dealers in India.  The audits revealed 
that the practice of Stryker India’s dealers inflating invoices for the sale of Stryker orthopedic 
products to certain private hospitals – an improper practice identified three years earlier in 
connection with the 2012 audits – had become more widespread.  Certain private hospitals in 
India (mostly large, corporate hospitals) routinely asked dealers to mark up the cost of the 
orthopedic products above the price that those hospitals had directly negotiated with Stryker 
India and actually paid to Stryker India’s dealers.  In doing so, dealers allowed these private 
hospitals to gain a windfall from passing on the higher (invoiced) prices to their patients or their 
insurance companies. 
18. The 2015 audits further confirmed that dealers failed to adequately maintain their 
financial records and had provided questionable payments or benefits to HCPs in contravention 
of Stryker’s business conduct policy, which prohibits the participation in any improper 
payments.  These practices, like the deficiencies identified in the 2012 audits, violated the 
dealers’ agreements with Stryker India. 
Stryker India Failed to Maintain Complete and Accurate Books and Records 
19. From 2010 through 2015, Stryker India failed to make and keep complete and 
accurate books and records that reflected its transactions and disposition of assets.  In particular, 
Stryker India recorded potentially problematic payments to its dealers and to HCPs, some of 
which lacked any supporting documentation reflecting a clear business purpose. 
20. A forensic review of Stryker India’s general ledger for the period 2010 through 
2015 found a complete lack of documentation for 144 out of 533 transactions selected as a 
sample of Stryker India’s highest-risk and most compliance-sensitive accounts.  The missing 

 
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documentation encompassed transactions of nearly every high-risk category, including: 
consulting payments to HCPs, payments of travel and lodging for HCPs, payments to event 
organizers, discounts on the price of Stryker products to dealers, commissions awarded to 
dealers, and marketing expenses. 
21. In addition, for many other high-risk transactions, Stryker India recorded 
payments with inaccurate or inadequate documentary support.  For example, Stryker India paid 
commissions to dealers for which the supporting documentation did not provide a clear 
justification, or the amount of such commissions exceeded Stryker India’s commission 
guidelines.  Payments intended to benefit HCPs also lacked sufficient documentation, such as 
consulting fees paid to doctors without adequate explanation of the doctors’ consulting services 
or hours billed, and payments for HCP travel with documentation that appeared falsified or 
lacking an appropriate basis for the travel. 
Stryker’s Sonopet Sales in China 
22. Stryker China sells Sonopet products directly to a state-owned “hub” distributor, 
which in turn sells the products to a network of sub-distributors.  From 2015 through 2017, at 
least 21 sub-distributors of Stryker’s Sonopet products in China were not vetted, approved, and 
trained by Stryker in accordance with its internal accounting controls.  During that time, the sale 
of some Sonopet products to hospitals involved third, fourth, and even fifth tier sub-distributors, 
none of which were subjected to due diligence approval or training.  Stryker China employees 
knew of and worked directly with certain of these unauthorized sub-distributors, and at times 
installation records Stryker China maintained were falsified to hide the involvement of the 
unauthorized sub-distributors.  Stryker’s failure to vet, approve, train, and monitor its distributors 
and sub-distributors in China in accordance with the company’s policies, increased the risk of 
bribery and other improper payments in connection with the sale of Stryker products.  Stryker 
failed to implement its internal accounting controls to detect and prevent the use of these 
unauthorized sub-distributors in China. 
Stryker’s Business in Kuwait 
23. From its office in Dubai, United Arab Emirates, Stryker, until recently, sold its 
orthopedic products to hospitals in Kuwait primarily through the Kuwait Distributor.  Most of 
the Kuwait Distributor’s sales of Stryker products were to Kuwait’s Ministry of Health, which 
procured medical products on behalf of Kuwait’s public hospitals.  From 2015 through 2017, the 
Kuwait Distributor made at least $32,000 in improper “per diem” payments to Kuwaiti HCPs to 
attend Stryker events, when Stryker had already directly paid the lodging, meals, and 
transportation costs for these individuals to attend the events.  When Stryker sought to exercise 
its audit rights under its distribution agreement with the Kuwait Distributor to review records to 
determine whether improper payments had been made to any government official, the Kuwait 
Distributor denied access.  Stryker had not before attempted to audit or otherwise review the 
Kuwait Distributor’s records to determine whether it was complying with Stryker’s policies even 
though Stryker had previously received a complaint from a former employee of the Kuwait 
Distributor alleging that the Kuwait Distributor paid bribes in connection with the sale of Stryker 
products.  Stryker failed to implement its internal accounting controls to test or otherwise assess 
whether the Kuwait Distributor was complying with Stryker’s anti-corruption policies.   

 
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IV. 
Internal Accounting Controls Violations 
24. As detailed above, Stryker failed to devise and maintain a system of internal 
accounting controls sufficient to provide reasonable assurances that transactions were recorded 
as necessary to permit preparation of financial statements in accordance with generally accepted 
accounting principles.  For example, Stryker recorded transactions of Stryker India for which 
Stryker could not verify the business purpose or otherwise account for the legitimacy of those 
expenses. 
25. Further, Stryker failed to devise and maintain a system of internal accounting 
controls sufficient to provide reasonable assurances that transactions were executed in 
accordance with management’s general or specific authorizations.  In India, even after the 2012 
audits revealed evidence of dealers not complying with Stryker policies — as required by their 
contracts with Stryker India — and of hospitals requesting invoices with prices higher than the 
prices that Stryker India had specifically negotiated with such hospitals, Stryker failed to devise 
and maintain a system of internal accounting controls designed to detect and prevent dealers 
from engaging in the practice of inflating invoices to certain private hospitals for the sale of 
Stryker orthopedic products.  In China, Stryker failed to vet, approve, train, and monitor sub-
distributors of its Sonopet product in accordance with the company’s policies, thereby increasing 
the risk of bribery and other improper payments in connection with the sale of Sonopet products. 
And in Kuwait, Stryker failed to implement its policies to test or otherwise assess whether the 
Kuwait Distributor was complying with Stryker’s anti-corruption policies.  
26. As a result of the conduct described above, Stryker violated Section 13(b)(2)(B) 
of the Exchange Act, which requires every issuer with a class of securities registered pursuant to 
Section 12 of the Exchange Act to, among other things, devise and maintain a system of internal 
accounting controls sufficient to provide reasonable assurances that transactions are (i) executed 
in accordance with management’s general or specific authorization; (ii) recorded as necessary to 
(I) permit preparation of financial statements in conformity with generally accepted accounting 
principles or any other applicable criteria and (II) maintain accountability for assets. 
Books and Records Violations 
27. As detailed above regarding Stryker India, during the period of 2010 through 
2015, Stryker was unable to provide any documentation for 27% of sampled high-risk 
transactions on Stryker India’s general ledger.  For other compliance-sensitive transactions, the 
available documentation was insufficient for purposes of determining accurately the recipient, 
amount, or purpose of the payments at issue. 
28. As a result of the conduct described above regarding Stryker India, Stryker 
violated Section 13(b)(2)(A) of the Exchange Act, which 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 that, in reasonable detail, accurately and fairly reflect the transactions and 
dispositions of the assets of the issuer. 

 
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Stryker’s Remedial Efforts 
29. In response to the Commission’s investigation, Stryker retained outside counsel 
and forensic auditors to conduct an internal investigation into the company’s compliance with 
the Foreign Corrupt Practices Act (“FCPA”) concerning Stryker’s activities in India, China, and 
Kuwait.  As the internal investigation progressed, Stryker shared its findings on an ongoing 
basis, voluntarily produced reports and other materials, and cooperated with the Commission 
staff’s investigation. 
30. Since the time of the conduct detailed above, Stryker undertook a number of 
remedial efforts, which include: (1) enhanced and updated policies, procedures, and best 
practices for Stryker India; (2) new compliance measures with additional controls around (i) the 
monitoring of Stryker’s relationship with HCPs and indirect channels, including dealers and 
distributors, (ii) reducing the risk of unauthorized business practices in India, and (iii) due 
diligence of third parties; (3) increased training of all Stryker India employees and local 
management, including an FCPA compliance workshop for Stryker India’s leadership team; (4) a 
new centralized system for dealer documentation, and a modified dealer commission model 
designed to increase transparency around the payment of commissions to dealers in India; (5) 
compliance audits related to marketing events, event documentation, and employee 
reimbursements in India; and (6) audits of dealers’ and distributors’ business practices in India. 
Further, Stryker terminated certain senior employees at Stryker India, appointed new leadership 
to head Stryker India, and sent a notice of termination to the Kuwait Distributor. 
31. Also in response to the Commission’s investigation, Stryker fortified its existing 
compliance program, which is designed to prevent, detect, and remediate potential 
misconduct.  This program develops, maintains, and implements corporate policies and standard 
operating procedures setting forth specific due diligence and documentation requirements for 
relationships with foreign officials, HCPs, consultants, and distributors.  
32. In determining to accept Stryker’s Offer, the Commission considered Stryker’s 
cooperation and remedial acts undertaken. 
V. 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent Stryker’s Offer. 
Accordingly, it is hereby ORDERED that: 
A. Pursuant to Section 21C of the Exchange Act, Respondent Stryker 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 Stryker shall, within 14 days of the entry of this Order, pay a civil 
money penalty in the amount of $7,800,000 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 31 U.S.C. 
§3717.  Payment must be made in one of the following ways: 

 
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(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 
(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 
Stryker as 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 Sanjay Wadhwa, Senior Associate 
Regional Director, Division of Enforcement, Securities and Exchange Commission, 200 Vesey 
Street, Suite 400, New York, NY 10281. 
C. 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. 
D. Respondent Stryker shall comply with the following undertakings: 
1. Retain an independent consultant (the “Independent Consultant”) not 
unacceptable to the Staff within sixty (60) calendar days after the issuance 
of this Order.  Within thirty (30) calendar days after the issuance of this 
Order, Respondent shall recommend to the Staff a qualified candidate to 
serve as the Independent Consultant.  The Staff shall provide feedback to 
Respondent within fifteen (15) calendar days of receiving Respondent’s 
recommendation. 

 
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2. The Independent Consultant candidate shall have, at a minimum, the 
following qualifications: demonstrated expertise with respect to the FCPA, 
including experience counseling on FCPA issues; experience designing 
and/or reviewing corporate compliance policies, procedures, and internal 
controls, including FCPA-specific policies, procedures, and internal 
controls; ability to access and deploy resources as necessary to discharge 
the Independent Consultant’s duties as described herein; and independence 
from Respondent to ensure effective and impartial performance of the 
Independent Consultant’s duties. 
3. The Independent Consultant should not have provided legal, auditing, or 
other services to, or have had any affiliations with, the Respondent during 
the two years prior to the issuance of this Order. 
4. Respondent shall retain the Independent Consultant for a period of 
eighteen (18) months from the date of the engagement.  Respondent shall 
exclusively bear all costs, including compensation and expenses, 
associated with the retention of the Independent Consultant. 
5. To ensure the independence of the Independent Consultant, Respondent 
shall not have the authority to terminate the Independent Consultant 
without the prior written approval of the Staff. 
6. The Independent Consultant’s responsibility is to review and evaluate 
Respondent’s internal controls, record-keeping, and anti-corruption 
policies and procedures relating to use of dealers, agents, distributors, sub-
distributors, and other such third parties that sell on behalf of Stryker (“the 
Policies and Procedures”) and to make recommendations designed to 
reasonably improve the Policies and Procedures.  This review and 
evaluation shall include an assessment of the Policies and Procedures as 
actually implemented, including in India, China, Kuwait, and other 
countries selected by the Independent Consultant, and how the Policies 
and Procedures fit within Respondent’s ethics and compliance function. 
The Independent Consultant shall consider whether the ethics and 
compliance function has sufficient resources, authority, and independence, 
and provides sufficient training and guidance. 
7. Respondent and the Independent Consultant shall agree that the 
Independent Consultant is an independent third-party and not an employee 
or agent of the Respondent.  In addition, Respondent and the Independent 
Consultant agree that no attorney-client relationship shall be formed 
between them. 
8. Respondent shall require the Independent Consultant to enter in an 
agreement with Respondent providing that, for the period of engagement 
and for a period of two years from completion of the engagement, the 
Independent Consultant shall not enter into any employment, consultant, 

 
11 
 
attorney-client, auditing, or other professional relationship with 
Respondent, or any of its present or former affiliates, directors, officers, 
employees, or agents acting in their capacity as such.  Any firm with 
which the Independent Consultant is affiliated or of which he/she is a 
member, and any person engaged to assist the Independent Consultant in 
performance of his/her duties under this Order, shall not, without prior 
written consent of the Staff, enter into any employment, consultant, 
attorney-client, auditing, or other professional relationship with 
Respondent, or any of its present or former affiliates, directors, officers, 
employees, or agents acting in their capacity as such for the period of the 
engagement and for a period of two (2) years after the engagement. 
9. Respondent shall require the Independent Consultant to prepare a written 
work plan and submit it to Respondent and the Staff for comment within 
thirty (30) calendar days of commencing the engagement.  The 
Respondent’s comments shall be provided to the Independent Consultant 
no more than fifteen (15) calendar days after receipt of the written work 
plan.  In order to conduct an effective initial review and to understand 
fully any deficiencies in the Policies and Procedures, including how FCPA 
compliance fits within Respondent’s ethics and compliance function, the 
Independent Consultant’s initial work plan shall include such steps as are 
reasonably necessary to develop an understanding of the facts and 
circumstances surrounding any violations that may have occurred as 
reflected in this matter and to assess the effectiveness of Respondent’s 
existing Policies and Procedures, and of Respondent’s ethics and 
compliance program.  Any dispute between Respondent and the 
Independent Consultant with respect to the work plan shall be decided by 
the Staff. 
10. Respondent shall cooperate fully with the Independent Consultant, and the 
Independent Consultant shall have the authority to take such reasonable 
steps as, in his or her view, may be necessary to be fully informed about 
Respondent’s Policies and Procedures in accordance with the principles 
set forth herein and applicable law, including data protection, blocking 
statutes, and labor laws and regulations applicable to Respondent.  To that 
end Respondent shall provide the Independent Consultant with access to 
all information, documents, records, facilities and/or employees, as 
requested by the Independent Consultant, that fall within the scope of the 
Independent Consultant’s responsibility, except as provided in this 
paragraph; and provide guidance on applicable laws (such as relevant data 
protection, blocking statutes, and labor laws). 
11. In the event the Respondent seeks to withhold from the Independent 
Consultant access to information, documents, records, facilities and/or 
employees of Respondent that may be subject to a claim of attorney-client 
privilege or to the attorney work product doctrine, or where Respondent 
reasonably believes production would otherwise be inconsistent with 

 
12 
 
applicable law or beyond the scope of these undertakings, Respondent 
shall work cooperatively with the Independent Consultant.  If the matter 
cannot be resolved, at the request of the Independent Consultant, 
Respondent shall promptly provide written notice to the Independent 
Consultant and the Staff.  Such notice shall include a general description 
of the nature of the information, documents, records, facilities and/or 
employees that are being withheld, as well as the basis for the claim.  To 
the extent Respondent has provided information to the Staff in the course 
of the investigation leading to this action pursuant to a non-waiver of 
privilege agreement, Respondent and the Independent Consultant may 
agree to production of such information to the Independent Consultant 
pursuant to a similar non-waiver agreement. 
12. Respondent shall require the Independent Consultant to issue a written 
report (“Report”) within six (6) months after being retained.  The Report 
shall cover the Independent Consultant’s review of Respondent’s Policies 
and Procedures: (a) summarizing its review and evaluation, and (b) if 
necessary, making recommendations based on its review and evaluation 
that are reasonably designed to improve Respondent’s Policies and 
Procedures.  Respondent shall require that the Independent Consultant 
provide the Report to the Board of Directors of Respondent and 
simultaneously transmit a copy to the Staff at the following address: 
Thomas P. Smith, Jr. Assistant Regional Director, Division of 
Enforcement, New York Regional Office, Brookfield Place, 200 Vesey 
Street, Suite 400, New York, NY 10281. 
13. Respondent shall adopt all recommendations in the Report within ninety 
(90) days of the issuance of the Report; provided, however, that, as to any 
recommendations that Respondent considers to be unduly burdensome, 
impractical, or costly, Respondent need not adopt the recommendations at 
that time, but may submit in writing to the Staff, within thirty (30) days of 
receiving the Report, an alternative policy or procedure designed to 
achieve the same objective or purpose.  Respondent and the Independent 
Consultant shall attempt in good faith to reach an agreement relating to 
each recommendation Respondent considers unduly burdensome, 
impractical, or costly.  In the event that Respondent and the Independent 
Consultant are unable to agree on an alternative proposal within thirty (30) 
days, Respondent will abide by the determinations of the Staff. 
14. After 180 days of completion of the implementation set forth above, the 
Independent Consultant shall have thirty (30) days to complete a follow-
up review to confirm that Respondent has implemented the 
recommendations or agreed-upon alternatives and continued the 
application of the Policies and Procedures, and to deliver a supplemental 
report to the Board of Directors of Respondent and the Staff setting forth 
its conclusions and whether any further improvements should be 
implemented. 

 
13 
 
15. Respondent agrees that the Staff may extend any of the dates set forth 
above at its direction. 
16. Respondent shall certify, in writing, compliance with the undertaking(s) 
set forth above.  The certification shall identify the undertaking(s), provide 
written evidence of compliance in the form of a narrative, and be 
supported by exhibits sufficient to demonstrate compliance.  The Staff 
may make reasonable requests for further evidence of compliance, and 
Respondent agrees to provide such evidence.  Respondent shall submit the 
certification and supporting material to: Thomas P. Smith, Jr., Assistant 
Regional Director, Division of Enforcement, with a copy to the Office of 
Chief Counsel of the Enforcement Division, no later than sixty (60) days 
from the date of the completion of the undertakings. 
17. Respondent agrees that these undertakings shall be binding upon any 
successor in interest to Respondent or any acquirer of substantially all of 
Respondent’s assets and liabilities or business. 
By the Commission. 
Brent J. Fields  
Secretary 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 84308 / September 28, 2018 

ACCOUNTING AND AUDITING ENFORCEMENT 

Release No. 3990 / September 28, 2018 

ADMINISTRATIVE PROCEEDING 

File No. 3-18853 

 

In the Matter of 

 

STRYKER CORPORATION 

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING REMEDIAL 

SANCTIONS AND 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 Stryker Corporation (“Stryker” 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 Remedial Sanctions and 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 that: 

Summary  

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

controls provisions of the Exchange Act by Stryker, a global leader in the medical technology 

industry, related to its operations in India, China, and Kuwait. 

2. Stryker’s policies, which applied to its global operations, prohibit bribery and 

other improper payments.  As part of its internal accounting controls, the company had policies, 

which applied to its subsidiaries, requiring, among other things, proper documentation of 

transactions; written agreements with distributors and sub-distributors that included anti-

corruption provisions and review rights to determine compliance; and due diligence and approval 

of, and anti-corruption training for, all distributors and sub-distributors.   

India 

3. From at least 2010 through 2015, Stryker’s wholly-owned subsidiary in India 

(“Stryker India”) failed to keep and maintain any documentation with respect to 27% of the 

transactions tested in an internal forensic review that targeted Stryker India’s high-risk and 

compliance-sensitive accounts and payments during the relevant period. Additionally, the 

forensic review found missing or inaccurate documentation for numerous other transactions 

flagged as high-risk, including expenses related to consulting fees, travel, and other benefits to 

health-care professionals (“HCPs”) in India. 

4. The sales transactions here involved Stryker India’s sales of orthopedic products 

to dealers, which subsequently sold the products to certain private hospitals. Stryker India 

authorized these dealer transactions only after Stryker India’s management negotiated and 

approved the price that the hospitals would pay to the dealers. Thus, in determining the price 

charged to dealers, Stryker India’s management and the dealers specifically negotiated the profit 

margin such dealers would stand to earn based on the difference between what hospitals paid the 

dealers and what the dealers paid Stryker India. Furthermore, all such transactions were 

governed by Stryker India’s policy of prohibiting dealers from making, requesting, or accepting 

any “improper payments to government or non-government officials, employees, or entities.” 

5. During the relevant period, certain of Stryker India’s dealers regularly issued 

“inflated invoices” upon the request of certain private hospitals. The private hospitals that 

requested inflated invoices from dealers profited from their purchase of Stryker orthopedic 

products by passing on the higher (invoiced) prices to their patients or their patients’ insurers, 

even as the hospitals paid the lower prices previously negotiated with Stryker India to Stryker 

India’s dealers. Stryker received internal complaints of this practice and uncovered evidence of 

such overbilling by one dealer when it conducted audits of three dealers in 2012. Yet Stryker 

failed to devise and maintain a system of internal accounting controls sufficient to detect, 

address, and prevent this widespread practice at the dealer level, which violated Stryker’s own 

policies governing the activities of Stryker India’s dealers. 



 

3 
 

China 

6. In China, Stryker operates through a wholly-owned subsidiary (“Stryker China”) 

that sells its Sonopet ultrasonic aspirator, as well as other products, through distributors.  From 

2015 through 2017, at least 21 sub-distributors of Stryker’s Sonopet product in China were not 

vetted, approved, or trained, as required by Stryker’s policies.  At times, Stryker China 

employees worked directly with these unauthorized sub-distributors, and at other times 

installation records were falsified to hide the involvement of the unauthorized sub-distributors in 

the sale of Sonopet products.  Stryker had in place certain internal accounting controls relating to 

third parties that limited transactions to those that complied with their contractual undertakings 

to adhere to Stryker’s anti-corruption policies and procedures.  The use of these unauthorized 

sub-distributors increased the risk of improper payments in connection with the sale of Stryker 

products.  Stryker failed to sufficiently implement its policies to detect and prevent the use of 

these unauthorized sub-distributors in China. 

Kuwait  

7. EMEA Supply Chain Services B.V. is a wholly-owned subsidiary of Stryker 

based in the Netherlands.  From an office located in Dubai, employees of this subsidiary oversee 

sales by Stryker's distributors in Kuwait.  Until 2018, Stryker had one primary distributor in 

Kuwait (the “Kuwait Distributor”) that sold Stryker orthopedic products to the Kuwait Ministry 

of Health.  From 2015 through 2017, the Kuwait Distributor made over $32,000 in improper “per 

diem” payments to Kuwaiti HCPs to attend Stryker events, when Stryker had directly paid the 

costs for lodging, meals, and local transportation for these individuals.  Stryker had in place 

certain internal accounting controls relating to third parties that limited transactions to those that 

complied with their contractual undertakings to adhere to Stryker’s anti-corruption policies and 

procedures.  Stryker failed to sufficiently implement policies to test or otherwise assess whether 

the Kuwait Distributor would allow the company to exercise its audit right to review records, and 

whether it was complying with the company’s policies prohibiting bribes and other improper 

payments by its distributors. 

8. Based on all of the above, Stryker violated Section 13(b)(2)(B) of the Exchange 

Act because it failed to devise and maintain, in its India, China, and Kuwait operations, a system 

of internal accounting controls sufficient to provide reasonable assurances that transactions were 

executed in accordance with management’s general or specific authorization, and that 

transactions were recorded as necessary to permit preparation of financial statements in 

conformity with generally accepted accounting principles and to maintain accountability for 

assets.  In addition, the failure to have internal accounting controls that ensured proper 

documentation of transactions involving Stryker India, described above, caused Stryker to 

violate Section 13(b)(2)(A) of the Exchange Act because its books and records did not, in 

reasonable detail, accurately or fairly reflect the transactions and dispositions of the assets of 

Stryker. 

Respondent  

9. Stryker is a Michigan corporation with its principal executive offices in 

Kalamazoo, Michigan.  Its common stock is registered with the Commission pursuant to Section 



 

4 
 

12(b) of the Exchange Act and is listed on the New York Stock Exchange under the symbol 

“SYK.” Stryker manufactures and distributes medical devices and products in more than 100 

countries around the world, including India, China, and Kuwait. The financial results of sales 

made in these countries are consolidated into the financial statements of Stryker. 

Prior Commission Action 

10. On October 24, 2013, the SEC filed settled cease-and-desist proceedings against 

Stryker for violations of the books and records and internal accounting controls provisions of the 

Exchange Act.  The Commission order found that, from approximately August 2003 to February 

2008, through five wholly-owned subsidiaries, Stryker made approximately $2.2 million in 

unlawful payments to government employees, including public HCPs in Mexico, Poland, 

Romania, Argentina, and Greece.  In the company’s books and records, Stryker incorrectly 

described these unlawful payments to foreign officials as legitimate consulting and service 

contracts, travel expenses, charitable donations, or commissions, when in fact the payments were 

made by Stryker to obtain or retain business.  Stryker also failed to devise and maintain a system 

of internal accounting controls sufficient to provide reasonable assurance that the company 

maintained accountability for its assets and that transactions were executed in accordance with 

management’s authorization.  As a result of those payments, Stryker earned approximately $7.5 

million in illicit profits. 

11. In settling with the Commission, Stryker consented to the issuance of an order 

requiring it to cease-and-desist from any violations and any future violations of Sections 

13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and to pay $7,502,635 in disgorgement, 

$2,280,888 in prejudgment interest, and a civil penalty of $3,500,000. 

Stryker India’s Business 

12. From at least 2010 through December 2015, Stryker sold its medical products in 

India through Stryker India, which generated approximately 85% of its revenues through sales to 

third-party dealers.  These dealers, in turn, sold Stryker products to end customers, primarily 

hospitals.  Approximately 85% of Stryker India’s end customers are hospitals in the private 

sector. 

13. Stryker’s policies required Stryker and its subsidiaries, including Stryker India, to 

maintain sufficient internal accounting controls.  Stryker India was also subject to Stryker’s code 

of conduct, which required, among other things, that Stryker India take steps to ensure that all 

payments made to government or non-government officials, employees, customers, and other 

persons and entities were proper.  Further, Stryker India was required to generate or obtain 

proper documentation to provide assurances that all transactions and business relationships with 

dealers, HCPs, consultants, and other third parties were legitimate. 

14. Stryker India entered into a contract with each dealer through which Stryker 

products were sold.  Pursuant to such contracts, Stryker India’s dealers were required to follow 

Stryker’s policies regarding the proper conduct of their business, which included a prohibition on 

making, requesting, or accepting any “improper payments to government or non-government 

officials, employees, or entities.” The contracts also obligated dealers to “maintain complete and 



 

5 
 

accurate records relating to [their] promotion, marketing, use and distribution of [Stryker] 

Products.”  Finally, under its contracts with dealers, Stryker India held audit rights to inspect the 

books and records of any of the 198 dealers through which Stryker products were sold in India. 

Stryker India’s Inadequate Oversight of Its Dealers 

15. In 2012, in response to allegations of misconduct concerning Stryker India’s 

dealers, Stryker exercised its audit rights over three dealers in India.  Those audits revealed 

insufficiencies in the financial record-keeping and internal accounting controls of all three 

dealers.  Additionally, Stryker identified suspicious expenses by one dealer and instances of 

another dealer over-billing a hospital upon the hospital’s request.  While Stryker took some 

corrective actions in response to these audits, including terminating one of the three dealers, the 

actions were limited to the three dealers audited.  

16. The above deficiencies violated Stryker India’s agreements with its dealers. 

Specifically, the deficiencies in dealers’ financial record-keeping violated dealers’ obligation to 

“maintain complete and accurate records relating to [their] promotion, marketing, use and 

distribution of [Stryker] Products,” and the over-billing violated Stryker’s business conduct 

policy prohibiting participation in any improper payments.  Despite the red flags raised during 

the 2012 audits, and numerous complaints reported to Stryker of dealer misconduct, Stryker did 

not act to determine the scope of dealer-inflated invoices until 2015. 

17. In 2015, Stryker performed audits of other dealers in India.  The audits revealed 

that the practice of Stryker India’s dealers inflating invoices for the sale of Stryker orthopedic 

products to certain private hospitals – an improper practice identified three years earlier in 

connection with the 2012 audits – had become more widespread.  Certain private hospitals in 

India (mostly large, corporate hospitals) routinely asked dealers to mark up the cost of the 

orthopedic products above the price that those hospitals had directly negotiated with Stryker 

India and actually paid to Stryker India’s dealers.  In doing so, dealers allowed these private 

hospitals to gain a windfall from passing on the higher (invoiced) prices to their patients or their 

insurance companies. 

18. The 2015 audits further confirmed that dealers failed to adequately maintain their 

financial records and had provided questionable payments or benefits to HCPs in contravention 

of Stryker’s business conduct policy, which prohibits the participation in any improper 

payments.  These practices, like the deficiencies identified in the 2012 audits, violated the 

dealers’ agreements with Stryker India. 

Stryker India Failed to Maintain Complete and Accurate Books and Records 

19. From 2010 through 2015, Stryker India failed to make and keep complete and 

accurate books and records that reflected its transactions and disposition of assets.  In particular, 

Stryker India recorded potentially problematic payments to its dealers and to HCPs, some of 

which lacked any supporting documentation reflecting a clear business purpose. 

20. A forensic review of Stryker India’s general ledger for the period 2010 through 

2015 found a complete lack of documentation for 144 out of 533 transactions selected as a 

sample of Stryker India’s highest-risk and most compliance-sensitive accounts.  The missing 



 

6 
 

documentation encompassed transactions of nearly every high-risk category, including: 

consulting payments to HCPs, payments of travel and lodging for HCPs, payments to event 

organizers, discounts on the price of Stryker products to dealers, commissions awarded to 

dealers, and marketing expenses. 

21. In addition, for many other high-risk transactions, Stryker India recorded 

payments with inaccurate or inadequate documentary support.  For example, Stryker India paid 

commissions to dealers for which the supporting documentation did not provide a clear 

justification, or the amount of such commissions exceeded Stryker India’s commission 

guidelines.  Payments intended to benefit HCPs also lacked sufficient documentation, such as 

consulting fees paid to doctors without adequate explanation of the doctors’ consulting services 

or hours billed, and payments for HCP travel with documentation that appeared falsified or 

lacking an appropriate basis for the travel. 

Stryker’s Sonopet Sales in China 

22. Stryker China sells Sonopet products directly to a state-owned “hub” distributor, 

which in turn sells the products to a network of sub-distributors.  From 2015 through 2017, at 

least 21 sub-distributors of Stryker’s Sonopet products in China were not vetted, approved, and 

trained by Stryker in accordance with its internal accounting controls.  During that time, the sale 

of some Sonopet products to hospitals involved third, fourth, and even fifth tier sub-distributors, 

none of which were subjected to due diligence approval or training.  Stryker China employees 

knew of and worked directly with certain of these unauthorized sub-distributors, and at times 

installation records Stryker China maintained were falsified to hide the involvement of the 

unauthorized sub-distributors.  Stryker’s failure to vet, approve, train, and monitor its distributors 

and sub-distributors in China in accordance with the company’s policies, increased the risk of 

bribery and other improper payments in connection with the sale of Stryker products.  Stryker 

failed to implement its internal accounting controls to detect and prevent the use of these 

unauthorized sub-distributors in China. 

Stryker’s Business in Kuwait 

23. From its office in Dubai, United Arab Emirates, Stryker, until recently, sold its 

orthopedic products to hospitals in Kuwait primarily through the Kuwait Distributor.  Most of 

the Kuwait Distributor’s sales of Stryker products were to Kuwait’s Ministry of Health, which 

procured medical products on behalf of Kuwait’s public hospitals.  From 2015 through 2017, the 

Kuwait Distributor made at least $32,000 in improper “per diem” payments to Kuwaiti HCPs to 

attend Stryker events, when Stryker had already directly paid the lodging, meals, and 

transportation costs for these individuals to attend the events.  When Stryker sought to exercise 

its audit rights under its distribution agreement with the Kuwait Distributor to review records to 

determine whether improper payments had been made to any government official, the Kuwait 

Distributor denied access.  Stryker had not before attempted to audit or otherwise review the 

Kuwait Distributor’s records to determine whether it was complying with Stryker’s policies even 

though Stryker had previously received a complaint from a former employee of the Kuwait 

Distributor alleging that the Kuwait Distributor paid bribes in connection with the sale of Stryker 

products.  Stryker failed to implement its internal accounting controls to test or otherwise assess 

whether the Kuwait Distributor was complying with Stryker’s anti-corruption policies.   



 

7 
 

IV. 

Internal Accounting Controls Violations 

24. As detailed above, Stryker failed to devise and maintain a system of internal 

accounting controls sufficient to provide reasonable assurances that transactions were recorded 

as necessary to permit preparation of financial statements in accordance with generally accepted 

accounting principles.  For example, Stryker recorded transactions of Stryker India for which 

Stryker could not verify the business purpose or otherwise account for the legitimacy of those 

expenses. 

25. Further, Stryker failed to devise and maintain a system of internal accounting 

controls sufficient to provide reasonable assurances that transactions were executed in 

accordance with management’s general or specific authorizations.  In India, even after the 2012 

audits revealed evidence of dealers not complying with Stryker policies — as required by their 

contracts with Stryker India — and of hospitals requesting invoices with prices higher than the 

prices that Stryker India had specifically negotiated with such hospitals, Stryker failed to devise 

and maintain a system of internal accounting controls designed to detect and prevent dealers 

from engaging in the practice of inflating invoices to certain private hospitals for the sale of 

Stryker orthopedic products.  In China, Stryker failed to vet, approve, train, and monitor sub-

distributors of its Sonopet product in accordance with the company’s policies, thereby increasing 

the risk of bribery and other improper payments in connection with the sale of Sonopet products. 

And in Kuwait, Stryker failed to implement its policies to test or otherwise assess whether the 

Kuwait Distributor was complying with Stryker’s anti-corruption policies.  

26. As a result of the conduct described above, Stryker violated Section 13(b)(2)(B) 

of the Exchange Act, which requires every issuer with a class of securities registered pursuant to 

Section 12 of the Exchange Act to, among other things, devise and maintain a system of internal 

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

in accordance with management’s general or specific authorization; (ii) recorded as necessary to 

(I) permit preparation of financial statements in conformity with generally accepted accounting 

principles or any other applicable criteria and (II) maintain accountability for assets. 

Books and Records Violations 

27. As detailed above regarding Stryker India, during the period of 2010 through 

2015, Stryker was unable to provide any documentation for 27% of sampled high-risk 

transactions on Stryker India’s general ledger.  For other compliance-sensitive transactions, the 

available documentation was insufficient for purposes of determining accurately the recipient, 

amount, or purpose of the payments at issue. 

28. As a result of the conduct described above regarding Stryker India, Stryker 

violated Section 13(b)(2)(A) of the Exchange Act, which 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 that, in reasonable detail, accurately and fairly reflect the transactions and 

dispositions of the assets of the issuer. 



 

8 
 

Stryker’s Remedial Efforts 

29. In response to the Commission’s investigation, Stryker retained outside counsel 

and forensic auditors to conduct an internal investigation into the company’s compliance with 

the Foreign Corrupt Practices Act (“FCPA”) concerning Stryker’s activities in India, China, and 

Kuwait.  As the internal investigation progressed, Stryker shared its findings on an ongoing 

basis, voluntarily produced reports and other materials, and cooperated with the Commission 

staff’s investigation. 

30. Since the time of the conduct detailed above, Stryker undertook a number of 

remedial efforts, which include: (1) enhanced and updated policies, procedures, and best 

practices for Stryker India; (2) new compliance measures with additional controls around (i) the 

monitoring of Stryker’s relationship with HCPs and indirect channels, including dealers and 

distributors, (ii) reducing the risk of unauthorized business practices in India, and (iii) due 

diligence of third parties; (3) increased training of all Stryker India employees and local 

management, including an FCPA compliance workshop for Stryker India’s leadership team; (4) a 

new centralized system for dealer documentation, and a modified dealer commission model 

designed to increase transparency around the payment of commissions to dealers in India; (5) 

compliance audits related to marketing events, event documentation, and employee 

reimbursements in India; and (6) audits of dealers’ and distributors’ business practices in India. 

Further, Stryker terminated certain senior employees at Stryker India, appointed new leadership 

to head Stryker India, and sent a notice of termination to the Kuwait Distributor. 

31. Also in response to the Commission’s investigation, Stryker fortified its existing 

compliance program, which is designed to prevent, detect, and remediate potential 

misconduct.  This program develops, maintains, and implements corporate policies and standard 

operating procedures setting forth specific due diligence and documentation requirements for 

relationships with foreign officials, HCPs, consultants, and distributors.  

32. In determining to accept Stryker’s Offer, the Commission considered Stryker’s 

cooperation and remedial acts undertaken. 

V. 

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

agreed to in Respondent Stryker’s Offer. 

Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 21C of the Exchange Act, Respondent Stryker 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 Stryker shall, within 14 days of the entry of this Order, pay a civil 

money penalty in the amount of $7,800,000 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 31 U.S.C. 

§3717.  Payment must be made in one of the following ways: 



 

9 
 

(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 

(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 

Stryker as 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 Sanjay Wadhwa, Senior Associate 

Regional Director, Division of Enforcement, Securities and Exchange Commission, 200 Vesey 

Street, Suite 400, New York, NY 10281. 

C. 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. 

D. Respondent Stryker shall comply with the following undertakings: 

1. Retain an independent consultant (the “Independent Consultant”) not 

unacceptable to the Staff within sixty (60) calendar days after the issuance 

of this Order.  Within thirty (30) calendar days after the issuance of this 

Order, Respondent shall recommend to the Staff a qualified candidate to 

serve as the Independent Consultant.  The Staff shall provide feedback to 

Respondent within fifteen (15) calendar days of receiving Respondent’s 

recommendation. 



 

10 
 

2. The Independent Consultant candidate shall have, at a minimum, the 

following qualifications: demonstrated expertise with respect to the FCPA, 

including experience counseling on FCPA issues; experience designing 

and/or reviewing corporate compliance policies, procedures, and internal 

controls, including FCPA-specific policies, procedures, and internal 

controls; ability to access and deploy resources as necessary to discharge 

the Independent Consultant’s duties as described herein; and independence 

from Respondent to ensure effective and impartial performance of the 

Independent Consultant’s duties. 

3. The Independent Consultant should not have provided legal, auditing, or 

other services to, or have had any affiliations with, the Respondent during 

the two years prior to the issuance of this Order. 

4. Respondent shall retain the Independent Consultant for a period of 

eighteen (18) months from the date of the engagement.  Respondent shall 

exclusively bear all costs, including compensation and expenses, 

associated with the retention of the Independent Consultant. 

5. To ensure the independence of the Independent Consultant, Respondent 

shall not have the authority to terminate the Independent Consultant 

without the prior written approval of the Staff. 

6. The Independent Consultant’s responsibility is to review and evaluate 

Respondent’s internal controls, record-keeping, and anti-corruption 

policies and procedures relating to use of dealers, agents, distributors, sub-

distributors, and other such third parties that sell on behalf of Stryker (“the 

Policies and Procedures”) and to make recommendations designed to 

reasonably improve the Policies and Procedures.  This review and 

evaluation shall include an assessment of the Policies and Procedures as 

actually implemented, including in India, China, Kuwait, and other 

countries selected by the Independent Consultant, and how the Policies 

and Procedures fit within Respondent’s ethics and compliance function. 

The Independent Consultant shall consider whether the ethics and 

compliance function has sufficient resources, authority, and independence, 

and provides sufficient training and guidance. 

7. Respondent and the Independent Consultant shall agree that the 

Independent Consultant is an independent third-party and not an employee 

or agent of the Respondent.  In addition, Respondent and the Independent 

Consultant agree that no attorney-client relationship shall be formed 

between them. 

8. Respondent shall require the Independent Consultant to enter in an 

agreement with Respondent providing that, for the period of engagement 

and for a period of two years from completion of the engagement, the 

Independent Consultant shall not enter into any employment, consultant, 



 

11 
 

attorney-client, auditing, or other professional relationship with 

Respondent, or any of its present or former affiliates, directors, officers, 

employees, or agents acting in their capacity as such.  Any firm with 

which the Independent Consultant is affiliated or of which he/she is a 

member, and any person engaged to assist the Independent Consultant in 

performance of his/her duties under this Order, shall not, without prior 

written consent of the Staff, enter into any employment, consultant, 

attorney-client, auditing, or other professional relationship with 

Respondent, or any of its present or former affiliates, directors, officers, 

employees, or agents acting in their capacity as such for the period of the 

engagement and for a period of two (2) years after the engagement. 

9. Respondent shall require the Independent Consultant to prepare a written 

work plan and submit it to Respondent and the Staff for comment within 

thirty (30) calendar days of commencing the engagement.  The 

Respondent’s comments shall be provided to the Independent Consultant 

no more than fifteen (15) calendar days after receipt of the written work 

plan.  In order to conduct an effective initial review and to understand 

fully any deficiencies in the Policies and Procedures, including how FCPA 

compliance fits within Respondent’s ethics and compliance function, the 

Independent Consultant’s initial work plan shall include such steps as are 

reasonably necessary to develop an understanding of the facts and 

circumstances surrounding any violations that may have occurred as 

reflected in this matter and to assess the effectiveness of Respondent’s 

existing Policies and Procedures, and of Respondent’s ethics and 

compliance program.  Any dispute between Respondent and the 

Independent Consultant with respect to the work plan shall be decided by 

the Staff. 

10. Respondent shall cooperate fully with the Independent Consultant, and the 

Independent Consultant shall have the authority to take such reasonable 

steps as, in his or her view, may be necessary to be fully informed about 

Respondent’s Policies and Procedures in accordance with the principles 

set forth herein and applicable law, including data protection, blocking 

statutes, and labor laws and regulations applicable to Respondent.  To that 

end Respondent shall provide the Independent Consultant with access to 

all information, documents, records, facilities and/or employees, as 

requested by the Independent Consultant, that fall within the scope of the 

Independent Consultant’s responsibility, except as provided in this 

paragraph; and provide guidance on applicable laws (such as relevant data 

protection, blocking statutes, and labor laws). 

11. In the event the Respondent seeks to withhold from the Independent 

Consultant access to information, documents, records, facilities and/or 

employees of Respondent that may be subject to a claim of attorney-client 

privilege or to the attorney work product doctrine, or where Respondent 

reasonably believes production would otherwise be inconsistent with 



 

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applicable law or beyond the scope of these undertakings, Respondent 

shall work cooperatively with the Independent Consultant.  If the matter 

cannot be resolved, at the request of the Independent Consultant, 

Respondent shall promptly provide written notice to the Independent 

Consultant and the Staff.  Such notice shall include a general description 

of the nature of the information, documents, records, facilities and/or 

employees that are being withheld, as well as the basis for the claim.  To 

the extent Respondent has provided information to the Staff in the course 

of the investigation leading to this action pursuant to a non-waiver of 

privilege agreement, Respondent and the Independent Consultant may 

agree to production of such information to the Independent Consultant 

pursuant to a similar non-waiver agreement. 

12. Respondent shall require the Independent Consultant to issue a written 

report (“Report”) within six (6) months after being retained.  The Report 

shall cover the Independent Consultant’s review of Respondent’s Policies 

and Procedures: (a) summarizing its review and evaluation, and (b) if 

necessary, making recommendations based on its review and evaluation 

that are reasonably designed to improve Respondent’s Policies and 

Procedures.  Respondent shall require that the Independent Consultant 

provide the Report to the Board of Directors of Respondent and 

simultaneously transmit a copy to the Staff at the following address: 

Thomas P. Smith, Jr. Assistant Regional Director, Division of 

Enforcement, New York Regional Office, Brookfield Place, 200 Vesey 

Street, Suite 400, New York, NY 10281. 

13. Respondent shall adopt all recommendations in the Report within ninety 

(90) days of the issuance of the Report; provided, however, that, as to any 

recommendations that Respondent considers to be unduly burdensome, 

impractical, or costly, Respondent need not adopt the recommendations at 

that time, but may submit in writing to the Staff, within thirty (30) days of 

receiving the Report, an alternative policy or procedure designed to 

achieve the same objective or purpose.  Respondent and the Independent 

Consultant shall attempt in good faith to reach an agreement relating to 

each recommendation Respondent considers unduly burdensome, 

impractical, or costly.  In the event that Respondent and the Independent 

Consultant are unable to agree on an alternative proposal within thirty (30) 

days, Respondent will abide by the determinations of the Staff. 

14. After 180 days of completion of the implementation set forth above, the 

Independent Consultant shall have thirty (30) days to complete a follow-

up review to confirm that Respondent has implemented the 

recommendations or agreed-upon alternatives and continued the 

application of the Policies and Procedures, and to deliver a supplemental 

report to the Board of Directors of Respondent and the Staff setting forth 

its conclusions and whether any further improvements should be 

implemented. 



 

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15. Respondent agrees that the Staff may extend any of the dates set forth 

above at its direction. 

16. Respondent shall certify, in writing, compliance with the undertaking(s) 

set forth above.  The certification shall identify the undertaking(s), provide 

written evidence of compliance in the form of a narrative, and be 

supported by exhibits sufficient to demonstrate compliance.  The Staff 

may make reasonable requests for further evidence of compliance, and 

Respondent agrees to provide such evidence.  Respondent shall submit the 

certification and supporting material to: Thomas P. Smith, Jr., Assistant 

Regional Director, Division of Enforcement, with a copy to the Office of 

Chief Counsel of the Enforcement Division, no later than sixty (60) days 

from the date of the completion of the undertakings. 

17. Respondent agrees that these undertakings shall be binding upon any 

successor in interest to Respondent or any acquirer of substantially all of 

Respondent’s assets and liabilities or business. 

By the Commission. 

Brent J. Fields  

Secretary