Business Crimes Hotline

Without admitting or denying the SEC's findings, Westport will pay almost $2.55 million in disgorgement and prejudgment interest and a civil penalty of $1.5 million, while Gougarty will pay a civil penalty of $120,000 in connection with her role in the scheme. Gougarty first joined Westport in the role of Chief Operating Officer in 2013 before serving as CEO and a member of the board from July 2016 until her voluntary retirement in January 2019. The conduct in question occurred from at least 2016 according to the SEC's Order, with the company first disclosing that it was under investigation in a 2017 filing.

According to the SEC's Order, the scheme involved a senior official (the Government Official) at a Chinese state-owned entity (SOE) that was the single largest shareholder in a Westport Chinese JV during the relevant period. In 2013, following a proposal from the SOE to take the JV public through an initial public offering (IPO), the JV's then-manager, who had been appointed by the SOE, incorrectly advised Westport that Chinese law required that the SOE hold a majority interest in order to qualify for an IPO. Westport, apparently relying on this advice, began a process of restructuring that resulted in the SOE holding 51% of the JV's shares, with the remainder split between Westport (23.33%), a privately held Hong Kong conglomerate with a pre-existing interest (16.67%), and a Chinese private equity fund in which the Government Official held a substantial personal financial interest (9%). According to the SEC, this was done with the intent of soliciting the Government Official's authorization of an increased dividend payment of $3.5 million to Westport from the Chinese JV and to secure a framework supply deal with the SOE.