By Beth Kowitt
November 6, 2013

FORTUNE — When Avon Products (AVP) reported third-quarter earnings last week, analysts zeroed in on the ongoing Foreign Corrupt Practices Act (FCPA) investigation into the company.

The inquiry into allegations of bribery, which have focused on Avon’s operations in China, has proven costly and led to high-level departures, as
detailed last year. Analysts are eager to see Avon put this issue behind it so the direct seller of beauty products can focus on executing a turnaround (the company reported a loss in the quarter as it also did for all of 2012).

Avon made a settlement offer to the Department of Justice and SEC in June for $12 million, which was subsequently rejected. CEO Sheri McCoy said on last week’s earnings call that the SEC made its own offer in September that “included monetary penalties of a magnitude significantly greater than our earlier offer.” She noted the company believes the DOJ also will make a counterproposal.

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There was nothing McCoy could add beyond saying that the company believes the amount put forward by the SEC is unwarranted. The Wall Street Journal reported in August that government officials have said that the company’s penalty should be more than $100 million.

Morgan Stanley analyst Dara Mohsenian estimated in a recent note that Avon’s market cap has lost $750 million on concerns related to the FCPA investigation — a figure, in his view, that suggests that shareholders’ fears are excessive. Mohsenian did a review of FCPA fines and came to the conclusion that “if Avon were to pay a similar amount to the 10th largest FCPA fine in history [$95 million] … [the] amount would be well below the $750 [million] implied market cap drop.” Mohsenian expects the fines to come in at a few hundred million dollars at most and that a lower penalty is likely.

If, in the end, Avon does end up with a fine even in the $100 million range, it could signal a new, tougher era for FCPA enforcement. According to Mohsenian’s review, only nine FCPA penalties in history have come in at more than $100 million. They have involved companies like Siemens (SI), Halliburton (HAL), and BAE Systems and were related to government contracts — “seemingly greater offenses than is likely at a direct seller,” Mohsenian writes.

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