Ubiquiti Networks Inc., a maker of wireless hardware and video surveillance equipment, agreed to pay a $504,225 penalty to settle apparent U.S. sanctions violations for allowing its hardware to be sold in Iran, according to a company filing.

The case illustrates how small companies can run afoul of compliance rules as they seek to expand in new markets.

Ubiquiti “demonstrated reckless disregard for U.S. sanction” law, and allowed its wireless equipment to be exported into Iran through distributors located in the United Arab Emirates and Greece, according to a release from the U.S. Office of Foreign Assets Control.

The firm had no compliance program at the time, according to the release. And even after Ubiquiti learned that the transactions broke U.S. law, the company allowed them to continue for another year, until February 2011, OFAC said.

The company said, in a filing released Thursday, that until early 2010 it didn’t prohibit its distributors from selling its products to Iran. After it learned of the potential violations, the company said that it failed to immediately “amend all its distribution agreements and to implement more robust compliance controls.”

Ubiquiti first made the issue of possible violations public in 2011, as it prepared for its initial public offering. As part of its IPO prospectus, the company said it hadn’t been sufficiently familiar with export control laws because of its small size and the “inexperience of our management team in these matters,”
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