Industry News

Update on Recently Published BIS Cases – "Don't Let This Happen to You"

Nov. 15, 2024
By: Marvin E. McPherson


The Bureau of Industry and Security (BIS) updated its July 2024 publication of “Don't Let This Happen to You”. BIS selected five new cased for republication to stress the importance of compliance with the Export Administration Regulations (EAR) and to inform businesses of the serious consequences of violations. The new cases highlight three main points.

First BIS highlighted the importance of verifying trading partners against restricted lists and restricted end-users before export. The newly added cases included GlobalFoundries and TE Connectivity Corporation.

1.     Global Foundries, a major semiconductor wafer manufacturer based in Malta, New York, and its subsidiary, GlobalFoundries U.S. 2 LLC, agreed to a mitigated civil penalty of $500,000. The companies violated the EAR by sending 74 shipments of semiconductor wafers valued at approximately $17.1 million to SJ Semiconductor (SJS), a company on the BIS Entity List.

2.     TE Connectivity Corporation, headquartered in Switzerland with a branch in Pennsylvania, alongside TE Connectivity HK Limited in Hong Kong, which faced a $5.8 million civil penalty for violating the EAR. From 2015 to 2019, TE Connectivity made 79 unauthorized exports totaling $1.74 million in items designated as EAR99 to Chinese parties on the BIS Entity List and for restricted UAV end uses. TE voluntarily disclosed the violations, which factored into BIS’s penalty mitigation.

Second BIS calls out a case we have highlighted relating to the importance of maintaining accurate records and providing timely export documentation.

3.     First Call International Inc., located in Haltom, Texas, agreed to a $439,992 civil penalty, with $364,992 suspended due to financial hardship. The violation involved First Call backdating a document to make it appear that a March 2018 export of secondary flight displays (SFDs) to the United Kingdom complied with the EAR. The company also agreed to provide EAR compliance training to employees to avoid future violations.

Lastly, BIS emphasis the necessity of reporting boycott-related requests.

4.     Quantum Corporation, a data storage and management firm from San Jose, California, received a $151,875 penalty for failing to report 45 requests from a UAE distributor to avoid Israeli-origin goods. Quantum voluntarily disclosed the requests to BIS, cooperated with the investigation, and implemented remedial actions, which helped reduce the penalty.

5.     Streamlight, Inc., a portable lighting manufacturer from Pennsylvania, was fined $44,750 for providing information about boycotted countries and failing to report a foreign boycott request. In preparation for a 2019 trade show in Bahrain, Streamlight certified to its logistics provider that the goods were not of Israeli origin and not manufactured by a company on the “Israeli Boycott Blacklist.”

The “Don’t let this happen to you” publication offers great insight for exporters regarding BIS’s priority for enforcement, but it also serves as a demonstrative example to review export compliance policies and to conduct yearly internal audits to verify adequate internal control. Many of the settlements prove that implementing compliance controls and voluntary disclosures could save your company millions of dollars. If you need assistance or have specific questions regarding your companies export compliance, please contact any attorney at Barnes Richardson and Colburn.