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June 5, 2015

Computer Sciences Corporation agreed to pay $190 million to settle SEC charges of manipulating financial results and concealing significant problems about the company’s contract with the UK’s National Health Service, the company’s largest and most high-profile contract.  Former CEO Michael Laphen agreed to return to CSC more than $3.7 million in compensation under the clawback provision of the Sarbanes-Oxley Act and pay a $750,000 penalty.  Former CFO Michael Mancuso agreed to return $369,100 in compensation and pay a $175,000 penalty.  SEC

Tagged in: Accounting Fraud, Damages and Penalties, Misrepresentations, Securities Fraud,

May 26, 2015

Deutsche Bank agreed to pay a $55 million penalty to settle SEC charges of filing misstated financial reports during the height of the financial crisis that failed to take into account a material risk for potential losses estimated to be in the billions of dollars.  SEC

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

May 6, 2015

The SEC filed fraud charges against four former officers of Wilmington Trust for intentionally understating past due bank loans during the financial crisis. According to the SEC, the former officials improperly excluded hundreds of millions of dollars of past due real estate loans from financial reports filed by Wilmington Trust in 2009 and 2010, violating a requirement to fully disclose the amount of loans 90 or more days past due. The former Delaware-based bank holding company was acquired by M&T Bank in May 2011 and paid $18.5 million in September 2014 to settle related SEC charges of improper accounting and disclosure fraud. SEC

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

April 9, 2015

Katsuichi Fusamae, a senior accounting officer at Molex Japan Co. Ltd., agreed to settle SEC charges he cost his company millions of dollars in trading losses and manipulated accounting records to avoid detection.  Specifically, the SEC alleged Fusamae engaged in unauthorized equity trading in the company’s brokerage accounts that resulted in losses of more than $110 million and then concealed the losses by taking out unauthorized and undisclosed company loans with Japanese banks and brokerage firms to replenish account balances.  Fusamae admitted wrongdoing and accepted a permanent bar from serving as an officer or director of a publicly traded company with possible monetary sanctions to come.  SEC

Tagged in: Accounting Fraud, Market Manipulation and Trading Violations, Misrepresentations, Securities Fraud,

April 1, 2015

Timothy Scronce agreed to settle charges of defrauding Illinois-based telecommunications company PCTEL Inc. and its shareholders during and after its acquisition of his business TelWorx Communications LLC and his three related telecommunications companies.  According to the SEC, Scronce used false accounting entries to inflate TelWorx’s quarterly revenues and earnings in the months leading up to the purchase to inflate the price PCTEL paid for the companies.  He also allegedly falsified PCTEL’s books and records and circumvented the company’s internal controls by recording bogus transactions.  Scronce consented to the SEC’s order requiring him to return his allegedly ill-gotten gains with interest, pay a civil penalty, and be barred for 10 years from serving as a public company officer or director.  SEC

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

February 10, 2015

The SEC announced William Slater and Peter E. Williams III, former CFOs of Silicon Valley software company Saba Software, agreed to return nearly a half-million dollars in bonuses and stock sale profits they received while Saba was committing accounting fraud.  While not personally charged with the company’s misconduct, Slater and Williams are still required under the Sarbanes-Oxley Act to reimburse the company for bonuses and stock sale profits received while the fraud occurred.  Last year, the SEC charged Saba Software and two former executives responsible for the accounting fraud in which timesheets were falsified to hit quarterly financial targets.  SEC February

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

February 6, 2015

The SEC imposed sanctions against four China-based accounting firms that had refused to turn over documents related to investigations of potential fraud.  The China-based firms are members of large international networks associated with the “Big Four” accounting firms and include Deloitte Touche Tohmatsu Certified Public Accountants Limited, Ernst & Young Hua Ming LLP, KPMG Huazhen, andPricewaterhouseCoopers Zhong Tian CPAs Limited Company.  Under the settlement, the firms each agreed to pay $500,000 and admit they did not produce documents before the proceedings were instituted against them in 2012.  SEC

Tagged in: Accounting Fraud, Securities Fraud,

February 5, 2015

The SEC charged Chicago-area alternative energy company Broadwind Energy, along with its former CEO J. Cameron Drecoll and CFO Stephanie K. Kushner, for accounting and disclosure violations that prevented investors from knowing that reduced business from two significant customers had caused substantial declines in the company’s long-term financial prospects.  Broadwind Energy agreed to pay a $1 million penalty, and Drecoll and Kushner agreed to pay nearly $700,000 in combined disgorgement and penalties.  SEC

Tagged in: Accounting Fraud, Misrepresentations, Securities Fraud,

September 25, 2014

Scottsdale, Arizona-based software company JDA Software Group Inc. agreed to pay a $750,000 penalty for having inadequate internal accounting controls over its financial reporting, which resulted in misstated revenues in public filings.  Specifically, the SEC found the company failed to properly recognize and report revenue from certain software license agreements it sold to customers because its internal accounting controls failed to consider information needed for determining a critical component of revenue recognition for software companies.  SEC

Tagged in: Accounting Fraud, Regulatory Violations, Securities Fraud,

September 24, 2014

The SEC charged Silicon Valley-based software company Saba Software, and two former Saba executives Patrick Farrell and Sajeev Menon, with accounting fraud involving falsified timesheets to hit quarterly financial targets.  An SEC investigation found that Farrell and Menon were atop a scheme at Saba in which managers based in the US directed consultants in India to either falsely record time they had not yet worked, or purposely fail to record hours worked during certain pay periods to conceal budget overruns from management and finance divisions.  This enabled Saba to achieve its quarterly revenue and margin targets by improperly accelerating and misstating virtually all its professional services revenue.  Saba agreed to pay $1.75 million to settle the SEC’s charges.  SEC

Tagged in: Accounting Fraud, Securities Fraud,

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