RTX Corporation (RTX, Financial) has announced significant legal resolutions involving its wholly-owned subsidiary, Raytheon Company. On October 15, 2024, Raytheon entered into a deferred prosecution agreement (DPA-1) with the Department of Justice (DOJ) and became subject to an administrative order by the Securities and Exchange Commission (SEC) on October 16, 2024. These actions address previously disclosed investigations into payments related to Middle East contracts since 2012.
Additionally, Raytheon has entered into a second deferred prosecution agreement (DPA-2) and a False Claims Act (FCA) settlement with the DOJ. These agreements resolve investigations into defective pricing claims for certain legacy contracts from 2011 to 2013 and in 2017.
Under DPA-1, the DOJ will defer criminal prosecution for three years concerning Raytheon's conspiracy to violate anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and the Arms Export Control Act (AECA). Raytheon is required to pay a criminal monetary penalty and forfeiture totaling $282 million within 10 business days. The SEC's order mandates a $102 million payment, covering disgorgement, prejudgment interest, and a civil penalty, to be paid within 14 days.
DPA-2 involves deferring prosecution for major fraud against the United States related to two legacy contracts. Raytheon must pay a $147 million penalty within 10 business days, and the FCA settlement requires a $428 million payment, including restitution and interest, within 7 days.
Both DPAs and the SEC order require Raytheon and RTX Corporation to retain an independent compliance monitor and undertake compliance self-reporting for three years. These financial obligations align with amounts previously accrued and disclosed in RTX's Form 10-Q for the quarter ending June 30, 2024.
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