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"Ultimately, when you look at the value of the software they got, you ask, why did they go that route?" FalconStor’s Albatal said. "Ultimately, they got great value from the software. Maybe it was a case of inexperienced sales reps. But we look at it and think, why did we ever do that?"
Greg Knieriemen, vice president of marketing at Chi Corp., a Cleveland, Ohio-based solution provider and long-time FalconStor partner, said that while the bribe investigation had more of an internal impact than a customer impact, he is glad to see it done.
"It was a cloud over FalconStor, but an internal cloud, not external," Knieriemen said. "It's good that FalconStor has this past them and can now focus on the future."
In the settlement reached with the U.S. Attorney’s Office, FalconStor admitted the bribery allegations and agreed to pay a $2.9 million fine. The company will pay an additional $2.9 million in civil penalties related to a civil lawsuit brought by the United States Securities and Exchange Commission.
FalconStor has also agreed to several internal changes, including dividing the roles of CEO and chairman and creating a new chief of compliance officer position. The company also has agreed to revise the FalconStor Code of Conduct and travel and entertainment policies to provide for clear disclosure of all gifts, travel and entertainment.
FalconStor has also agreed to implement new training initiatives, better document all equity grants and revise its compensation procedures.
Albatal said the agreement is actually a win for FalconStor.
"We admitted the charges, but can get them dropped in 18 months if we comply with the terms of the agreement," he said. "That's a win. Another win is there's no monitor. Usually there is. That's a testimony to what we have done since then, including strengthening our internal controls and showing this was an isolated incident."
PUBLISHED JUNE 29, 2012
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