October 20, 2016

Houston-based technology solutions company FMC Technologies will pay a $2.5 million penalty to settle charges that it overstated profits in one of its business segments.  Former Controller, Jeffrey Favret, and business unit controller, Steven Croft, will pay $40,000 collectively to settle charges that they caused these accounting violations in order to meet internal targets.  The SEC’s order finds that after being pressured to improve performance in the Energy Infrastructure Segment at FMC, Favret and Croft artificially reduced the value of a liability the company recorded for employee paid time off, thus overstating the segment’s pre-tax operating profits by $800,000.  This enabled an internal target to be met for the first quarter of 2013.  The SEC’s order also found that Croft failed to comply with internal accounting controls when he directed that his business unit switch to a new accounting system without taking reasonable steps to ensure that errors would not arise.  Errors did occur, causing the overstatement  of the segment’s results in two consecutive quarters in 2014.  SEC

Tagged in: Accounting Fraud,