UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES ACT OF 1933

Release No. 11034 / February 22, 2022

SECURITIES EXCHANGE ACT OF 1934

Release No. 94296 / February 22, 2022

ACCOUNTING AND AUDITING ENFORCEMENT

Release No. 4285 / February 22, 2022

ADMINISTRATIVE PROCEEDING

File No. 3-20783

In the Matter of

SCOTT BOHABOY,

Respondent.

CORRECTED ORDER INSTITUTING 

CEASE-AND-DESIST PROCEEDINGS, 

PURSUANT TO SECTION 8A OF THE 

SECURITIES ACT OF 1933 AND 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASEAND-DESIST ORDER

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate that ceaseand-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”) against Scott Bohaboy (“Bohaboy” or “Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over him and the subject matter of these 

proceedings, which are admitted, and except as provided herein in Section V, Respondent consents 

to the entry of this Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 8A of the 

Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, 

and Imposing a Cease-and-Desist Order (“Order”), as set forth below. 
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III.

On the basis of this Order and Respondent’s Offer, the Commission finds1that: 

Summary

1. From July 2015 until October 2019, Respondent Scott Bohaboy was Treasurer of

Baxter International Inc. (“Baxter”), a publicly-traded, U.S.-based healthcare product company.

2. Baxter generates the majority of its revenue outside of the U.S. Baxter reports its 

consolidated financial results in U.S. dollars, although many of its subsidiaries have a different 

functional currency as they manufacture and sell products globally and transact in foreign 

currencies. The values of these foreign currencies relative to the U.S. dollar fluctuate frequently. 

3. From at least 1995 through July 2019, the foreign exchange rate convention (“FX 

Convention”) Baxter used to record foreign currency transactions recognized by subsidiaries in 

their functional currencies and to uniformly translate the results of subsidiaries with foreign 

functional currencies into U.S. dollars was not in accordance with U.S. generally accepted 

accounting principles (“GAAP”).

4. Baxter’s Treasury department was responsible for managing the company’s foreign 

exchange risk. Beginning in at least 2009 and continuing through July 2019, Baxter improperly 

leveraged its FX Convention by engaging in intra-company transactions for the purpose of 

generating foreign exchange accounting gains or avoiding foreign exchange accounting losses (the 

“FX Transactions”). These FX Transactions had the effect of materially misstating Baxter’s net 

income as reported in its public filings. 

5. Beginning in at least 2009, the Treasury department regularly engaged in the FX 

Transactions, which generated consistent annual foreign exchange gains. During his time as 

Treasurer, which commenced in July 2015, Bohaboy was aware of the consistent gains, but never 

considered how the Treasury department was able to consistently generate gains, or whether the 

transactions that generated the gains were permissible.

6. In October 2019, Baxter announced that it was conducting an internal investigation 

concerning the FX Transactions. In March 2020, Baxter restated its financial statements, which 

reduced its previously reported net income for 2017 through June 30, 2019 and retained earnings as 

of January 1, 2017 by $582 million, collectively. Of this amount, $517 million was related to 

foreign exchange gains and losses dating back to 2010, which was in part attributable to FX 

 

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not 

binding on any other person or entity in this or any other proceeding. 
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Transactions. Misstatements of foreign exchange gains and losses during Bohaboy’s time as 

Treasurer were at least $245 million.

7. Based on his conduct, and as described in further detail below, Bohaboy violated 

Sections 17(a)(2) and 17(a)(3) of the Securities Act and caused Baxter’s violations of Sections 13(a) 

and 13(b)(2)(A) of the Exchange Act and Rules 13a-1, 13a-11 and 13a-13 thereunder. 

Respondent

8. Scott Bohaboy, age 51, is a resident of Elmhurst, Illinois. Bohaboy started at 

Baxter in 2006 and became Baxter’s Treasurer in July 2015. He was both Baxter’s Treasurer and 

Head of Financial Planning & Analysis starting in March 2016. Prior to becoming Treasurer, 

Bohaboy had no treasury experience and he was not a certified public accountant. He resigned 

from his role as Treasurer in October 2019 and ultimately was terminated in March 2020. Bohaboy 

has no prior enforcement or disciplinary history with the Commission.

Other Relevant Entity

9. Baxter International Inc. is a Delaware corporation with its principal place of 

business in Deerfield, Illinois. Its common stock is registered pursuant to Section 12(b) of the 

Exchange Act and trades on the New York Stock Exchange. Baxter files periodic reports, including 

annual reports on Form 10-K and quarterly reports on Form 10-Q, with the Commission pursuant to 

Section 13(a) of the Exchange Act and related rules thereunder. During the relevant period, Baxter 

sold securities to the public pursuant to registration statements filed with the Commission.

Facts 

Baxter’s Foreign Exchange Rate Convention

10. FASB Accounting Standards Codification Topic 830, “Foreign Currency Matters” 

(ASC 830), provides guidance concerning foreign exchange rate conventions. ASC 830-20-30-1 

requires that foreign currency transactions initially be measured and recorded in an entity’s 

functional currency using the exchange rate on the date of the transaction. ASC 830-20-35-2 

requires that foreign currency denominated assets and liabilities be remeasured at the end of each 

reporting period using the exchange rate at that date.

11. Before July 2019, Baxter’s FX Convention was not in accordance with GAAP 

because foreign currency transactions in a given month were initially measured using exchange 

rates from a specified date near the middle of the previous month as opposed to the exchange rate 

on the date of the transaction. Additionally, foreign currency denominated assets and liabilities 

were subsequently remeasured at the end of each month using exchange rates from a specified date 

near the middle of the then current month, called “T Day,” and not at the end of the reporting 

period. 
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12. Because of Baxter’s FX Convention, Baxter employees knew the exchange rates that 

would apply to intra-company transactions from the T Day in a given month through month-end. 

Treasury Employees Leveraged Baxter’s Foreign Exchange Rate to Record Gains

13. Baxter’s Treasury department was responsible for managing Baxter’s exposure to 

fluctuations in foreign exchange rates, which Baxter managed on a consolidated basis. 

14. Beginning in about 2007, Baxter’s Treasury department began focusing on 

managing Baxter’s foreign exchange rate exposure more efficiently and at a lower cost. Baxter 

wanted to reduce its use of third-party derivative contracts and instead manage its foreign currency 

exposures on a consolidated basis through offsetting cash positions. Baxter developed the FX 

Transactions as a way to better control reported foreign exchange gains and losses. 

15. Each FX Transaction comprised a series of transactions designed to create a foreign 

exchange gain or avoid a loss at a Baxter subsidiary. For example, when the dollar was 

strengthening in comparison to the Euro, Baxter would generate a foreign exchange gain by 

moving U.S. dollars to a Euro-functional Baxter entity. Specifically, a U.S. dollar Baxter entity 

would make a capital distribution in U.S. dollars to its Baxter Euro-functional parent (“Euro 

Parent”). Euro Parent would then enter into simultaneous transactions with Baxter’s Eurofunctional cash pooling entity (“Euro Cash Pooling Entity”) to (i) trade the dollars for Euros and 

(ii) loan Euros in the same amount it just traded. The Euro Cash Pooling Entity would record a

foreign exchange gain on the U.S. dollars that it held at month end. The gain was the difference 

between exchange rates for the prior month’s T Day and current month’s T Day. After month-end, 

the Treasury group would typically unwind the currency trade and the loan.

16. Initially, the Treasury department used the FX Transactions to avoid losses caused 

by foreign exchange rate fluctuations. Over time, this practice evolved to proactively generating

gains from foreign exchange rate fluctuations. Baxter used the FX Transactions to generate nonoperating foreign exchange accounting gains or avoid accounting losses since at least 2009. 

17. Because of Baxter’s FX Convention, Treasury personnel knew the foreign 

exchange rates that would apply to month-end transactions before they happened. With this 

knowledge, certain Treasury personnel executed FX Transactions to generate specific amounts of 

accounting gains or avoid specific amounts of accounting losses. 

Bohaboy Negligently Failed to Investigate the FX Transactions and Take Corrective Action

18. Bohaboy became Baxter’s Treasurer in July 2015. By 2016, Bohaboy was also 

serving as the head of Baxter’s global Financial Planning & Analysis group. Although Bohaboy 

was not involved in the development of the FX Transactions, in his dual roles, he became aware 

that there were consistent gains generated by the Treasury department in the “other (income) 

expense, net” line. He also knew that the Treasury department sometimes entered into intracompany transactions after T Day that resulted in gains. 
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19. Beginning in the fourth quarter of 2017, as part of a company-wide initiative to 

improve Baxter’s forecast accuracy and as a result of the consistent gains being generated by the 

Treasury department, Bohaboy decided to more accurately forecast the “other (income) expense,

net” line of Baxter’s financial statements. The foreign exchange component of the other (income) 

expense line forecast was based on the average actual foreign exchange gains reported by Baxter 

over the previous several quarters, discounted slightly for volatility. Bohaboy did not take any 

steps to investigate whether the month-end transactions generating the gains were permissible. 

Because the transactions had been occurring prior to his role as Treasurer, he believed that the 

transactions had been previously vetted and approved. 

Baxter’s Inaccurate Financial Reporting

20. The accounting gains generated (or losses avoided) from the FX Transactions were 

reported on the “other (income) expense, net” line of Baxter’s financial statements and were 

reflected in Baxter’s net income and earnings per share (“EPS”).

21. During Bohaboy’s tenure as Treasurer, Baxter reported foreign exchange gains of 

$36 million in the last two quarters of 2015, $28 million in 2016, $50 million in 2017, $73 million 

in 2018, and $22 million for the first two quarters of 2019. The improper FX Transactions had the 

effect of inflating Baxter’s net income and EPS. 

22. In late July 2019, Baxter’s tax department asked certain Treasury personnel about 

the details of the FX Transactions. The Treasury personnel explained the FX Transactions to the 

Tax personnel including that the FX Transactions were used to generate foreign exchange gains or 

avoid losses. Shortly thereafter, a team within Baxter, including Bohaboy, undertook to change its 

FX Convention. 

23. In October 2019, Baxter announced that it was conducting an internal investigation 

concerning the FX Transactions and Baxter put Bohaboy on administrative leave. 

24. On February 13, 2020, Baxter announced that its consolidated financial statements 

for the years ended December 31, 2016, 2017, and 2018 and its quarterly financial statements for 

the quarters ended March 31, 2017 through June 30, 2019, should no longer be relied upon because 

of misstatements to Baxter’s previously reported foreign exchange gains and losses. 

25. On March 17, 2020, Baxter filed its Form 10-K for the period ending December 31, 

2019. In that filing, Baxter announced it had completed the investigation concerning the FX 

Transactions and restated its financial statements and financial information for 2017, 2018, and the 

first half of 2019, including each of the quarterly and year-to-date periods from 2018 through 2019, 

to correct material misstatements related to the FX Transactions as well as other immaterial 

misstatements. The 10-K also included restatements of selected unaudited financial information 

for the years ended December 31, 2015 and 2016. Baxter terminated Bohaboy when it completed 

the investigation. 
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26. In quantifying the misstatements, Baxter identified all legal entities that had foreign 

exchange gains or losses on intra-company transactions above an immaterial threshold and 

remeasured the foreign exchange gains and losses for those transactions by applying a new 

exchange rate convention in accordance with GAAP. No distinction was made on whether the 

foreign exchange gain or loss resulted from FX Transactions. Baxter also remeasured the gains 

and losses on foreign currency derivative contracts in these same entities using the new exchange 

rate convention. 

27. As a result of the restatement, Baxter reduced its total reported foreign exchange 

gains and losses from 2010 through the second quarter of 2019 by $517 million. Misstatements of 

foreign exchange gains and losses during Bohaboy’s time as Treasurer were at least $245 million.

28. The bonus compensation of Baxter senior management, including Bohaboy, was 

based, in part, on Baxter meeting performance metrics tied to EPS, which had been inflated by 

Baxter’s FX Convention and the related FX Transactions. In March 2020, after conclusion of its 

internal investigation, Baxter recouped bonuses from certain of its officers, including $191,981 

from Bohaboy via reductions in 2019 bonuses. The amount that Baxter recouped from Bohaboy is 

an approximation of the amount by which his bonus payments were inflated due to Baxter’s 

inflated EPS.

Violations

29. As a result of the conduct described above, Respondent violated Sections 17(a)(2) 

and 17(a)(3) of the Securities Act, which prohibit any person from directly or indirectly obtaining 

money or property by means of any untrue statement of a material fact or any omission to state a 

material fact necessary in order to make the statements made, in light of the circumstance under 

which they are made, not misleading, or engaging in any transaction, practice, or course of 

business which operates or would operate as a fraud or deceit upon the purchaser, in the offer or 

sale of securities. A violation of these provisions does not require scienter and may rest on a 

finding of negligence. See Aaron v. SEC, 446 U.S. 680, 685, 701-02 (1980).

30. As a result of the conduct described above, Respondent caused Baxter’s violations

of Section 13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 13a-13 thereunder, which 

require issuers with securities registered under Section 12 of the Exchange Act to file annual, 

current, and quarterly reports with the Commission containing such information as the 

Commission’s rules may require. A violation of these reporting provisions does not require 

scienter and may rest on a finding of negligence. See SEC v. Wills, 472 F. Supp. 1250, 1268 

(D.D.C. 1978). A finding of negligence is sufficient to establish causing under Exchange Act 

Section 21C(a) where the primary violation does not require scienter. See KPMG, LLP v. SEC, 

289 F.3d 109, 120 (D.C. Cir. 2002). 

31. As a result of the conduct described above, Respondent caused Baxter’s violations

of Section 13(b)(2)(A) of the Exchange Act, which requires issuers with securities registered under 

Section 12 of the Exchange Act to make and keep books, records and accounts which, in 
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reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the 

issuer. Scienter is not an element of the books and records provision. See Ponce v. SEC, 345 F.3d 

722, 737 n.10 (9th Cir. 2003) (noting that a “plain reading of Section 13(b) reveals that it also does 

not impose a scienter requirement”). 

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 8A of the Securities Act and Section 21C of the Exchange Act, 

Respondent cease and desist from committing or causing any violations and any future violations of 

Sections 17(a)(2) and 17(a)(3) of the Securities Act and Sections 13(a) and 13(b)(2)(A) of the

Exchange Act and Rules 13a-1, 13a-11 and 13a-13 thereunder. 

B. Respondents shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $125,000 to the Securities and Exchange Commission. If timely payment 

is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

Payment must be made in one of the following ways: 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request; 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to: 

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying Scott 

Bohaboy as a Respondent in these proceedings, and the file number of these proceedings; a copy of 

the cover letter and check or money order must be sent to Jeffrey A. Shank, Division of 

Enforcement, Securities and Exchange Commission, 175 W. Jackson Blvd., Ste. 1450, Chicago, 

Illinois 60604. 
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C. Pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, a Fair Fund is created 

for the penalties referenced in paragraph IV.B. above (the “Bohaboy Fair Fund”) and the 

Bohaboy Fair Fund shall be added to the Fair Fund established in the Commission’s related 

proceeding, In the Matter of Baxter International Inc., Admin. Proc. No. 3-20781 (instituted 

February 22, 2022) (the “Baxter Fair Fund”). The Baxter Fair Fund will be distributed to affected 

investors in accordance with a Commission-approved plan of distribution in that proceeding. 

Amounts ordered to be paid as civil money penalties pursuant to this Order shall be treated as 

penalties paid to the government for all purposes, including all tax purposes. To preserve the 

deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, he shall 

not argue that he is entitled to, nor shall he benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in 

this action (“Penalty Offset”). If the court in any Related Investor Action grants such a Penalty 

Offset, Respondent agrees that he shall, within 30 days after entry of a final order granting the 

Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the Penalty 

Offset to the Securities and Exchange Commission. Such a payment shall not be deemed an 

additional civil penalty and shall not be deemed to change the amount of the civil penalty imposed 

in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a private 

damages action brought against Respondent by or on behalf of one or more investors based on 

substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding.

V.

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and admitted by 

Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Respondent under this Order or any other judgment, order, consent order, decree 

or settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Respondent of the federal securities laws or any regulation or order issued under such laws, as set 

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. § 523(a)(19).

By the Commission.

Vanessa A. Countryman

Secretary