On March 19, 2012, Dun & Bradstreet Corporation (NYSE: DNB) said it was reviewing allegations that local employees in China may have violated the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits bribes to foreign officials, and certain other laws. As a result of the internal probe, Dun & Bradstreet said it temporarily suspended its subsidiary, Shanghai Roadway D&B Marketing Services Co. Ltd. (“Shanghai Roadway”), as it investigated whether the company’s data-collection practices violated local consumer-privacy laws, the Wall Street Journal reported. The disclosure followed a report by the state-controlled China Central Television, which revealed improper collection of private data from 150 million consumers.
Shares of the Dun & Bradstreet fell 14.08% on May 8, 2012, after the company announced disappointing first quarter results and revised downward its 2012 core revenue growth estimate to 0% to 3% from 3% to 5%. The business information database company said its first quarter results fell below expectations because of unexpected weakness in North America along with the closure of a subsidiary in China, which also resulted in a reduction to full year revenue and free cash flow guidance. On a GAAP basis, the company reported quarterly operating income of $74.4 million, down 17% from the prior year similar period, primarily due to impairment charges related to the shut down of the Shanghai Roadway in China.
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