August 24, 2020

US aerospace company discloses possible sanctions violation in a recent securities filing

In a securities filing on August 19, 2020, Curtiss-Wright, an North Carolina-based aerospace manufacturer and service provider, disclosed that it may have violated newly implemented US sanctions against Russia, when it failed to notice that two long-time customers were “acquired” by a sanctioned company in 2019. Curtiss-Wright filed an Initial Notice of Voluntary Self-Disclosure in January of 2020, informing the US Department of the Treasury’s Office of Foreign Assets Control that it may have violated the Ukraine-Related Sanctions Regulations, 31 CFR 589, and Directive 3 under Executive Order 13662, “Blocking Property of Additional Persons Contributing to the Situation in Ukraine.”  According to the Form 8-K, outside counsel was retained to determine the root cause of the possible violation, and discovered that a contracts administrator, after realizing that new sanctions prohibited credit terms in excess of 30 days, changed the terms on certain customer invoices to 30 days for product that had already shipped, so that banks would allow payments.  

The Form 8-K reflects that Curtiss-Wright’s counsel considers this violation to be a low to medium infraction that may result in a fine, but have no material adverse effect because of two mitigating factors: 1) the administrator acted without consent of management, and 2) the administrator was terminated upon discovery of his actions.    

Form 8-K