UTC: SEC Conducts Investigation Over Non-Employee Sales Representative Issues

(RTTNews) - Diversified conglomerate United Technologies Corp. (UTX) said in a regulatory filing that on April 7, 2014, the SEC notified UTC that it is conducting a formal investigation and issued a subpoena to UTC seeking production of documents related to the disclosures. UTC said it is cooperating fully with the investigation.

Because the investigation is at an early stage, the company said it cannot predict its outcome or the consequences thereof at this time.

In December 2013 and January 2014, the company made voluntary disclosures to the United States Department of Justice, the Securities and Exchange Commission Division of Enforcement and the United Kingdom's Serious Fraud Office to report the status of its internal investigation regarding a non-employee sales representative retained by United Technologies International Operations, Inc. or UTIO and International Aero Engines or IAE for the sale of Pratt & Whitney and IAE engines and aftermarket services, respectively, in China.

At the outset of the internal investigation, UTIO and IAE suspended all commission payments to the sales representative, and UTIO and IAE have not resumed making any payments. This led to two claims by the sales representative for unpaid commissions: a civil lawsuit filed against UTIO and UTC and an arbitration claim against IAE.

The firm said that it is contesting the lawsuit and the arbitration claim. It does not believe that the resolution of the lawsuit or the arbitration will have a material adverse effect on its competitive position, results of operations, cash flows or financial condition.

In addition, the company stated that UTC Fire & Security Americas Corporation, Inc. or UTCFS has been named as a defendant in three putative class actions that were filed on behalf of purported classes of persons who allege that third-party entities placed "robocalls" and/or placed calls to numbers listed on the "Do Not Call Registry" on behalf of UTCFS in contravention of the Telephone Consumer Protection Act. In each putative class action suit, plaintiffs seek injunctive relief and monetary damages. Each violation under the TCPA provides for $500 in statutory damages or up to $1,500 for any willful violation.

The company assert that the third-party entities that initiated the calls were not acting on its behalf in making any such calls. It believed that UTCFS has meritorious defenses to these claims. It is presently unable to estimate the damages for which UTCFS could be liable in the event plaintiffs prevail in one or more of these cases.