3M Company Rotten Score Breakdown

In August 2023, the U.S. Securities and Exchange Commission announced that 3M Company agreed to pay more than $6.5 million to resolve charges that it violated the books-and-records and internal-accounting-controls provisions of the Foreign Corrupt Practices Act (FCPA). The SEC found that employees of 3M's China subsidiary arranged overseas trips for Chinese government officials employed by state-owned healthcare facilities. Although the trips were presented internally as conferences, educational events and healthcare visits, the SEC found that they often included tourism activities intended to encourage officials to purchase 3M products. From at least 2014 through 2017, the subsidiary spent nearly $1 million on at least 24 trips involving tourism activities. Employees also created alternate itineraries containing sightseeing and leisure activities and concealed them from compliance personnel. The SEC found that the costs were recorded as legitimate business expenses and that 3M benefited by at least $3.5 million in increased sales. 3M agreed to pay disgorgement, prejudgment interest and a $2 million civil penalty. The company settled without admitting or denying the SEC's findings. 3M's subsequent SEC filing states that it had discovered the issues internally, voluntarily disclosed the investigation to U.S. authorities and cooperated; the DOJ closed its investigation without taking action. Sources: SEC press release https://www.sec.gov/newsroom/press-releases/2023-160 SEC enforcement order https://www.sec.gov/litigation/admin/2023/34-98222.pdf 3M SEC filing https://investors.3m.com/financials/sec-filings/content/0000066740-23-000092/mmm-20230930.htm

In 2018, 3M Company agreed to pay $9.1 million to resolve U.S. government allegations that it knowingly sold defective Combat Arms Earplugs Version 2 (CAEv2) to the U.S. military without disclosing defects that impaired their effectiveness. The Department of Justice alleged that 3M and its predecessor, Aearo Technologies, knew the earplugs were too short for proper insertion in some users' ears and could loosen imperceptibly. According to the government, this meant the devices did not provide the expected hearing protection for certain users. DOJ further alleged that the defect was not disclosed to the military. The settlement resolved allegations under the False Claims Act. The underlying case was brought by whistleblower Moldex-Metric, which received approximately $1.91 million from the settlement. Importantly, DOJ stated that the claims resolved by the settlement were allegations and that there was no determination of liability. The Combat Arms earplug controversy subsequently developed into massive product-liability litigation involving claims from U.S. service members and veterans alleging hearing loss and tinnitus. Sources: U.S. Department of Justice https://www.justice.gov/usao-sc/pr/3m-company-agrees-pay-91-million-resolve-allegations-it-supplied-united-states-defective U.S. Department of Justice — Office of Public Affairs https://www.justice.gov/archives/opa/pr/3m-company-agrees-pay-91-million-resolve-allegations-it-supplied-united-states-defective-dual U.S. District Court — 3M Combat Arms Earplug MDL https://flnd.uscourts.gov/3m-products-liability-litigation-mdl-no-2885

In June 2023, 3M Company entered into a nationwide class settlement with U.S. public water systems over claims involving PFAS contamination of drinking water. The settlement was designed to fund testing, treatment and remediation for public water suppliers that had detected PFAS or might detect PFAS in the future. 3M disclosed that the agreement had a nominal value of up to $12.5 billion, with a present-value commitment of up to approximately $10.3 billion, payable over 13 years. The company recorded a $10.3 billion pre-tax charge related to the settlement. The settlement addressed claims by public water systems alleging PFAS-related harm to drinking water and associated costs of monitoring, treatment and remediation. It received final court approval in April 2024. 3M has stated that the settlement does not constitute an admission of liability. Sources: 3M Investor Relations — Public Water Supplier PFAS Settlement https://investors.3m.com/news-events/press-releases/detail/1784/3m-resolves-claims-by-public-water-suppliers-supports 3M Investor Relations — Final Court Approval https://investors.3m.com/news-events/press-releases/detail/1836/3m-settlement-with-public-water-suppliers-to-address-pfas 3M Settlement Agreement https://investors.3m.com/financials/sec-filings/content/0000066740-23-000048/ex101publicwssa.htm