For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31961 ------------------------------------------------------------------------------ Order Code RL31961 CRS Report for Congress Received through the CRS Web Civil Charges in Corporate Scandals Updated February 23, 2006 Mark Jickling Specialist in Public Finance Government and Finance Division Paul H. Janov Information Research Specialist Knowledge Services Group Congressional Research Service ~ The Library of Congress Civil Charges in Corporate Scandals Summary Since the collapse of Enron Corp. in late 2001, there has been a series of scandals involving major U.S. corporations. This report lists civil suits filed by federal regulatory agencies charging individuals and corporations with violations related to these scandals. The list is limited to corporations and their officers or employees that fit within the Enron pattern. That is, these are cases that allege one or more of the following: irregular accounting and auditing, management self- dealing, conflicts of interest between firms and financial advisors (or Wall Street firms and their customers), and manipulation or abusive trading in energy markets. Small "garden variety" examples of securities or accounting fraud are excluded. A number of these cases have also resulted in criminal indictments, some followed by guilty pleas. These post-Enron criminal charges are listed in CRS Report RL31866, Criminal Charges in Corporate Scandals, by Mark Jickling and Paul H. Janov. The civil cases listed here include only those filed by federal regulatory agencies -- principally the Securities and Exchange Commission (SEC), but also a few actions by the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission (FERC). Private lawsuits, such as shareholder derivative actions, are not included, although many of the companies listed are targets of multiple private suits brought by investors, employees, and others. It should be noted that the most common form of resolution of civil cases like these is the consent agreement, whereby the defendant neither admits nor denies any wrongdoing. Despite the formal nonadmission of guilt, the consent agreement often imposes fines and other sanctions. These are described in the list. This report will be updated as events warrant. Contents Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 List of Tables Table 1. List of Civil Charges Filed by Federal Regulators in Corporate Scandals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Civil Charges in Corporate Scandals Introduction The collapse of Enron Corp. in late 2001 marked the beginning of a long series of scandals involving major U.S. corporations. This report lists civil suits filed by federal regulatory agencies charging individuals and corporations with violations related to these scandals. The list is limited to companies and their officers or employees that fit within the Enron pattern. That is, these are cases that allege one or more of the following: irregular accounting and auditing, management self- dealing, conflicts of interest between firms and financial advisors (or Wall Street firms and their customers), and manipulation or abusive trading in energy markets. Small "garden variety" examples of securities or accounting fraud are excluded. A number of these cases, noted in the table, have also resulted in criminal indictments, some followed by guilty pleas. These post-Enron criminal charges are listed in CRS Report RL31866, Criminal Charges in Corporate Scandals. The civil cases listed here include only those filed by federal regulatory agencies -- principally the Securities and Exchange Commission (SEC), but also a few actions by the Commodity Futures Trading Commission (CFTC) and the Federal Energy Regulatory Commission (FERC). Private lawsuits, such as shareholder derivative actions, are not included, although many of the companies listed are targets of multiple private suits brought by investors, employees, and others. The most common form of resolution of civil cases like these is the consent agreement, whereby the defendant neither admits nor denies any wrongdoing. Despite the formal nonadmission of guilt, the consent agreement often imposes fines and other sanctions. These are described in the list. Descriptions of the charges are mostly drawn from government agency press releases or other documents. These are accessible on the agencies' websites. For example, SEC press releases are available at [http://www.sec.gov/news/press.shtml], CFTC press releases are available at [http://www.cftc.gov/cftc/cftcpressoffice.htm], and FERC's at [http://www.ferc.gov/press-room/press-releases.asp]. These press releases often contain links to the actual court filings, which provide more detailed descriptions of the cases. Additional abbreviations used in the following table are NASD (National Association of Securities Dealers), NYSE (New York Stock Exchange), and NASAA (North American Securities Administrators Association). CRS-2 Table 1. List of Civil Charges Filed by Federal Regulators in Corporate Scandals Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Adams Harkness, Inc. 8/25/04 (S) The SEC announced that it had settled enforcement actions against the seven broker- SEC Press Release Friedman, Billings, Ramsey & Co., Inc. dealers for failing to disclose that they had received payments for providing research 2004-117 Janney Montgomery Scott LLC coverage of certain public companies, in violation of the Securities Act of 1933. Morgan Keegan & Co., Inc. Pursuant to the enforcement actions, the seven firms will pay penalties totaling Needham & Company, Inc. $3,650,000. Prudential Equity Group, LLC SG Cowen & Co., Inc. Adelphia Communications 7/24/02 (F) The SEC charges that Adelphia and the named individuals (1) fraudulently SEC Press Release concealed corporate liabilities by placing them on the books of off-balance-sheet 2002-110 entities, (2) falsified reported financial results, and (3) concealed rampant self- John J. Rigas, founder dealing, including diversion of corporate funds to private uses. Disgorgement of ill- gotten gains and a bar from service as officers or directors of public companies are Timothy J. Rigas sought. Michael J. Rigas 4/25/05 (S) The SEC announced that it had reached an agreement to settle a civil enforcement SEC Press Release action against Adelphia Communications Corporations, its founder, John J. Rigas, 2005-63 James P. Rigas and his three sons, Timothy J. Rigas, Michael J. Rigas, and James P. Rigas. Under the settlement agreement, the Rigas family members will forfeit in excess of $1.5 James R. Brown, senior executive billion in assets that they derived from the fraud, including the Rigas family's interests in certain cable properties and will pay $715 million into a victim fund. Michael C. Mulcahy, senior executive Alliance Capital Management L.P. 12/18/03 (S) The SEC settled enforcement action against Alliance Capital for defrauding mutual SEC Press Release fund investors by allowing market timing in certain of its mutual funds in exchange 2003-176 for fee-generating investments in other Alliance Capital investment vehicles. The commission ordered Alliance Capital to pay $250 million, consisting of $150 million in disgorgement and $100 million in penalties. All of the money will be distributed to the shareholders harmed by Alliance Capital's market timing arrangements. American Express Financial Advisors Inc. 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $3,706,693. CRS-3 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Arthur Andersen Phillip E. Harlow, senior partner 1/27/03 (S) Settled charges by the SEC relating to Harlow's work at Sunbeam Corp. Harlow Washington Post, was barred from practicing accounting before the SEC for three years. 1/28/03, p. E1 Banc of America Capital Management, 2/9/05 (S) The SEC settled enforcement actions against BACAP, BACAP Distributors, and SEC Press Release LLC (BACAP) BAS for entering into improper and undisclosed agreements that allowed favored 2005-16 large investors to engage in rapid short-term securities trading in certain Nations BACAP Distributors, LLC (BACAP Funds mutual funds as well as unaffiliated mutual funds. The Commission ordered Distributors) them to pay $375 million, consisting of $250 million in disgorgement and $125 million in penalties. The money will be distributed to the mutual funds and their Banc of America Securities, LLC (BAS) shareholders that were harmed as a result of market timing and late trading. Banc of America Securities LLC (BAS) 3/10/04 (S) The SEC settled enforcement action against BAS for violations of the record SEC Press Release keeping and access requirements of securities laws. As part of the settlement, BAS 2004-29 agreed to a censure and a $10 million civil penalty. Banc One Investment Advisors 6/29/04 (S) The SEC settled enforcement action against BOIA and Mark A. Beeson. The SEC Press Release Corporation (BOIA) commission found that BOIA violated, and Beeson aided and abetted by allowing 2004-90 excessive short-term trading in One Group funds. The commission ordered BOIA Mark Beeson, president and CEO of One to pay disgorgement of $10 million and a civil penalty of $40 million and ordered Group Mutual Funds (One Group) Beeson to pay a civil penalty of $100,000. Bear, Stearns & Co. Inc. 4/28/03 (S) Settled charges by New York State, NASD, NASAA, NYSE, and SEC relating to SEC Press Release Credit Suisse First Boston LLC issuance of research reports not based on principles of fair dealing and good faith. 2003-54 Goldman, Sachs & Co. The 10 firms will pay a total of $875 million in penalties ($387.5 million) and Lehman Brothers Inc. disgorgement ($487.5 million). J. P. Morgan Securities Inc. Merrill Lynch, Pierce, Fenner & Smith, Incorporated Morgan Stanley & Co. Incorporated Citigroup Global Markets Inc. f/k/a Solomon Smith Barney Inc. USB Warburg LLC U.S. Bancorp Piper Jaffray Inc. CRS-4 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Bear, Stearns & Co. Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $280,469 Bear Wagner Specialists LLC 3/30/04 (S) The SEC and the NYSE announced the initiation and settlement of enforcement SEC Press Release Fleet Specialist, Inc. actions against five NYSE specialist firms. Through particular transactions by 2004-42 LaBranche & Co., LLC certain of their registered specialists, the firms violated federal securities laws and Spear, Leeds & Kellogg Specialists LLC exchange rules by executing orders for their dealer accounts ahead of executable Van der Moolen Specialists USA, LLC public customer or "agency" orders and therefore improperly profited from trading opportunities. The firms will pay a total of $241,823,257 in penalties and disgorgement. Brecek & Young Advisors, Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $31,224. Bridgeway Capital Management 9/15/04 (S) The SEC settled enforcement proceedings against Bridgeway and John Noland Ryan SEC Press Release Montgomery in connection with more than $4.4 million in illegal performance-based 2004-131 fees that Bridgeway charged to three of its mutual funds. The settlement requires John Noland Ryan Montgomery, president that Bridgeway reimburse the affected fund shareholders $4,407,700, plus prejudgment interest of $458,764, and that Bridgeway and Montgomery pay penalties of $250,000 and $50,000, respectively. CSFB (Credit Suisse First Boston) 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of fraudulent research reports and improper allocation of "hot" initial 2003-54 public offerings of stock. Paid fines totaling $200 million. 1/22/02 (S) Settled SEC and NASD charges relating to abusive allocations of shares in "hot" SEC Press Release initial public offerings of stock by paying fines totaling $100 million. 2002-14 CMS Energy Corporation (CMS) 3/17/04 (S) The SEC settled a fraud enforcement action against CMS and Terry Woolley in SEC Press Release connection with more than $5 billion in deceptive round-trip energy trades that 2004-38 grossly inflated CMS's reported revenues. CMS and Woolley agreed to cease and Terry Woolley, controller desist from committing or causing violations of the antifraud, reporting, books and records, and internal controls provisions of the federal securities laws. Woolley also agreed to pay a $25,000 penalty. CRS-5 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Preston D. Hopper, chief accounting officer 3/17/04 (F) The SEC filed a civil suit for fraud and other securities law violations. Tamela C. Pallas, chief executive of trading subsidiary CUC International Inc. and Cendant Corporation (CUC merged with HFS Incorporated on 12/17/1997 to form Cendant Corporation) Walter A. Forbes, CUC's chairman and CEO 2/28/01 (F) The SEC charged that Forbes and Shelton directed a massive financial fraud while SEC Litigation selling millions of dollars worth of the company's common stock. Release No. 16910 E. Kirk Shelton, CUC's president and chief operating officer Cosmo Corigliano, CUC's controller and 5/14/04 (S) Cosmo Corigliano and his spouse must transfer assets that have an aggregate value SEC Litigation CFO of at least $14 million to a court-appointed receiver, as disgorgement of unjust Release No. 18711 enrichment from a long-running financial fraud that he helped supervise and direct Agnes T. Corigliano, relief defendant during his time at CUC International Inc., the corporate predecessor of Cendant Corporation. Mary Louise Scully, relief defendant Canadian Imperial Bank of Commerce (CIBC) Paul A. Flynn, managing director 2/03/04 (F) The SEC charged Paul A. Flynn with fraud for his role in financing unlawful mutual SEC Press Release fund trading. 2004-12 Frank Quattrone, investment banker 3/06/03 (F) The NASD charged Quattrone with "spinning" initial public offering shares, that is, Wall Street Journal, giving shares to executives in exchange for other investment banking business. 3/07/03, p. C1 Charles Schwab & Co., Inc. 9/14/04 (S) The SEC settled enforcement proceedings against Charles Schwab & Co., Inc. The SEC Press Release commission charged that Schwab allowed investment adviser customers to change 2004-128 mutual fund orders after the 4:00 p.m. Eastern time market close, creating the risk that such customers could unfairly capitalize on late-breaking news at the expense of other mutual fund investors. Schwab consented to the entry of an order that it cease and desist from such violations and pay a $350,000 civil penalty. CRS-6 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Citigroup, Inc. 7/28/03 (S) Settled charges by the SEC regarding Citigroup's role in Enron Corporations's SEC Press Release manipulation of its financial statements and assistance it provided Dynegy Inc. in 2003-87 manipulation of that company's financial statements. Citigroup was ordered to pay $120 million as disgorgement, interest, and penalty. Of that amount, $101 million pertains to Citigroup's Enron-related conduct and $19 million pertains to the Dynegy conduct. Columbia Management Advisors, Inc. 2/24/04 (F) The SEC charged that the firms allowed certain preferred mutual fund customers to SEC Press Release Columbia Funds Distributor Inc. engage in short-term and excessive trading, while at the same time representing 2004-20 publicly that it prohibited such trading. Peter Martin, national sales manager 2/9/05 (S) The SEC settled an enforcement action against Columbia Management Advisors, SEC Press Release Inc., Columbia Funds Distributor, Inc., and Martin, Gustafson, and Palombo for their 2005-15 Erik Gustafson, Columbia portfolio manager role in connection with undisclosed market timing arrangements in Columbia funds. The Columbia entities will pay $140 million, all of which will be distributed to investors harmed by the conduct. Martin will pay $10,000 in disgorgement and a Joseph Palombo, chief operating officer $50,000 penalty, Gustafson and Palombo will each pay a $100,000 penalty. Additionally, all three men will serve varying lengths of suspensions from James Tambone, co-president associating with investment companies or acting as investment advisers. Tambone and Hussey were charged by the SEC with market timing arrangements that benefited the executives but were detrimental to long-term fund shareholders. Robert Hussey, sales executive Computer Associates International, Inc. 9/22/04 (S) The SEC announced securities fraud charges against Computer Associates SEC Press Release International, Inc. and three of the company's former top executives. The SEC 2004-134 alleges that from 1998 to 2000, Computer Associates routinely kept its books open Sanjay Kumar, CEO and chairman to record revenue from contracts executed after the quarter ended in order to meet DOJ Press Release Wall Street quarterly earnings estimates. Computer Associates agreed to settlements 642 (9/22/04) with the SEC and the Justice Department in which the company will pay $225 Stephen Richards, head of sales million in restitution to shareholders and will make reforms to its corporate governance and financial accounting controls. Woghin agreed in a partial settlement Steven Woghin, general counsel to a permanent injunction and officer and director bar with monetary sanctions to be decided at a later point. CRS-7 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Cresap, Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $99,458. Datek Securities Corp. 1/24/02 (S) Agreed to pay fines totaling about $6.3 million to settle SEC securities fraud charges relating Wall Street Journal, to abusive trading on the NASDAQ stock market. 1/25/02, p. C9 Sheldon Maschler, trader 1/14/03 (S) The four agreed to pay fines totaling about $53 million to settle SEC charges relating Wall Street Journal, to abusive trading on the NASDAQ stock market. 1/15/03, p. C1 Jeffrey Citron, trader Aaron Elbogen, CEO Moishe Zelcer, compliance officer David Lerner Associates, Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $32,711. Deutsche Bank Securities 12/03/02 (S) Paid a $1.65 million fine to settle SEC charges relating to failure to retain e-mail SEC Press Release records. 2002-173 Dynegy Inc. 9/24/02 (S) Settled SEC charges relating to improper and misleading accounting (relating to SEC Press Release fictitious "round-trip" energy trades) by paying a $3 million fine. 2002-140 12/19/02 (S) CFTC settled charges that Dynegy and West Coast Power manipulated the price of CFTC Release natural gas by reporting false price and volume information. Dynegy agreed to 4728-02 cease and desist from further violations and pay a $5 million fine. Gene S. Foster, vice president 6/12/03 (F) Charged by the SEC with disregarding accounting advice from Dynegy's outside SEC Press Release auditors, establishing secret side agreements to conceal their improper conduct, and 2003-72 Jamie Olis, vice president concealing transaction details from the company, the company's auditors, and the investing public. Helen C. Sharkey, manager Enron Corp. CRS-8 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Andrew Fastow, chief financial officer 10/02/02 (F) Based on charges of violations of antifraud, record keeping, and internal controls SEC Press Release provisions of securities laws, the SEC seeks disgorgement of ill-gotten gains, 2002-143 including compensation, civil money penalties, and a bar from serving as an officer or director of a public company. The commission settled its action in coordination 1/14/04 (S) with the Justice Department's Enron Task Force, which entered into a guilty plea SEC Press Release with Fastow on related criminal charges. In resolving the parallel civil and criminal 2004-6 proceedings, Fastow has agreed to serve a 10-year sentence, to disgorge more than $23 million, and to cooperate with the government's continuing investigation. Michael J. Kopper, corporate official 8/21/02 (S) To settle SEC charges of securities fraud, related to misleading accounting practices, SEC Press Release Kopper agreed to disgorge and forfeit about $12 million, and to be barred from 2002-126 serving as an officer or director of a public company. Hunter Shively, natural gas trading supervisor 3/13/03 (F) The CFTC charged Shively and Enron with manipulating natural gas prices and CFTC Release operating an illegal futures exchange. 4762-03 Richard A. Causey, chief accounting officer 1/22/04 (F) Charged with violating, and aiding and abetting the violations of, the antifraud, SEC Litigation periodic reporting, books and records, and internal controls provisions of the federal Release No. 18551 securities laws. Jeffrey K. Skilling, president, CEO, COO 2/19/04 (F) Charged with violating, and aiding and abetting violations of, the antifraud, lying to SEC Press Release auditors, periodic reporting, books and records, and internal controls provisions of 2004-18 the federal securities laws. Paula H. Rieker 5/19/04 (S) The SEC charged Rieker with violating the antifraud provisions of the federal SEC Litigation securities laws. Without admitting or denying the allegations, Rieker agreed to be Release No. 18717 barred from acting as an officer or director of a public company and will, subject to the approval of the U.S. District Court, pay disgorgement, prejudgment interest, and a civil penalty totaling $499,333. CRS-9 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Kenneth L. Lay, chairman and CEO 7/8/04 (F) The SEC initiated civil charges against Lay for his role in a wide-ranging scheme SEC Press Release to defraud by falsifying Enron's publicly reported financial results and making false 2004-94 and misleading public representations about Enron's business performance and financial condition. Enron Broadband Services, Inc. Kenneth D. Rice, CEO 3/12/03 (F) Charged with violating antifraud laws and personally reaping $150 million in SEC Press Release 5/01/03 unlawful profits. The suit seeks disgorgement and civil money penalties. 2003-58 Joseph Hirko, CEO (F, amended) Kevin P. Hannon, chief operating officer Rex Shelby, vice president F. Scott Yeager, vice president Kevin A. Howard, executive Michael W. Krautz, executive Fidelity Brokerage Services, LLC 8/3/04 (S) The SEC and the New York Stock Exchange announced the initiation and settlement SEC Press Release of enforcement actions against Fidelity Brokerage Services, LLC, as a result of the 2004-103 alteration or destruction of documents in numerous Fidelity Brokerage branch offices. In settlement of these actions, Fidelity Brokerage will pay a total of $2 million, consisting of a $1 million civil penalty imposed by the SEC and a $1 million fine imposed by the NYSE. Foreign Currency (forex) Futures 11/18/03 (F) The U.S. Commodity Futures Trading Commission announced that it filed six CFTC Release Contracts separate federal injunctive actions, charging a total of 31 individuals and entities 4867-03 with engaging in fraud in the sale and solicitation of illegal foreign currency futures contracts. The CFTC actions resulted from participation in Operation Wooden New York Times, Nickel, an undercover law enforcement sting run by federal enforcement personnel. 11/20/03, sec. C, p. 1 Wall Street Journal, 11/20/03, p. C1 CRS-10 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Franklin Advisers, Inc. 8/2/04 (S) The SEC announced that Franklin Advisers, Inc., an investment adviser firm in the SEC Press Release fourth largest U.S. mutual fund complex, has agreed to pay $50 million and to 2004-102 undergo compliance reforms to settle charges that it permitted rapid in-and-out trading, known as market timing, in mutual funds that it managed, contrary to fund prospectus wording. 12/13/04 (S) The SEC filed settled charges against Franklin Advisers, Inc. and Franklin SEC Press Release Templeton Distributors, Inc. alleging that Franklin, without proper disclosure, used 2004-168 fund assets to compensate brokerage firms for recommending the Franklin Templeton mutual funds over others to their clients. This practice is known as compensating brokerage firms for "shelf space." As part of the settlement, Franklin agreed to pay $1 in disgorgement and a $20 million penalty as well as undergo certain compliance reforms. Fremont Investment Advisors 11/4/04 (S) The SEC charged Fremont, Tengler, and Adams with market timing. It also charged SEC Press Release Fremont for allowing mutual fund trades to be placed after the 4:00 p.m. market 2004-153 Nancy Tengler, president and CEO 11/4/04 (S) close. Fremont agreed to pay $4.146 million, and Tengler agreed to pay $127,000 and be suspended from the industry for six months to settle the Commission's fraud Larry Adams, vice president 11/4/04 (F) charges. The civil action against Adams is still open. CRS-11 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Gateway, Inc. 11/13/03 (S) The SEC charged that Gateway, Inc., violated the antifraud, reporting, and record SEC Press Release keeping provisions of the federal securities laws. Without admitting or denying the 2003-157 commission's findings, Gateway consented to cease and desist from committing or causing any violation or future violation of these provisions. Jeffrey Weitzen, CEO 11/13/03 (F) The SEC charged that each engaged in a fraudulent earnings manipulation scheme to meet Wall Street analysts' expectations and that each made false statements and John J. Todd, senior vice president, CFO concealed from the investing public important information about the success of Gateway's personal computer business in the second and third quarters of 2000. Robert D. Manza, controller Gemstar-TV Guide International, Inc. Henry C. Yuen, CEO 6/19/03 (F) Charged with securities fraud whereby the two overstated revenues and reported the SEC Press Release inflated revenues to the investing public. The suit seeks antifraud injunctions, civil 2003-75 Elsie M. Leung, CFO money penalties, disgorgement of ill-gotten gains, and a permanent bar from service as an officer or director of a public company. Peter C. Boylan, co-president 1/5/04 (F) The SEC charged that these executives participated in Gemstar's widespread and SEC Press Release complex scheme to inflate its licensing and advertising revenue and to mislead 2004-1 investors about the company's true financial performance. Jonathan B. Orlick, general counsel 8/10/04 (S) The SEC agreed to settle with Peter C. Boylan. As part of the settlement, Boylan SEC Litigation will consent to a fraud injunction, without admitting or denying the allegations in the Release No. 18826 Craig Waggy, CFO Commission's complaint, and will pay a total of $600,000 in disgorgement and civil penalties. CRS-12 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Goldman, Sachs 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of research reports not based on principles of fair dealing and good faith. 2003-54 Paid fines totaling $110 million. 12/03/02 (S) Paid a $1.65 million fine to settle SEC and NASD charges relating to failure to SEC Press Release retain e-mail records. 2002-173 9/04/03 (S) Charged Goldman, Sachs willfully violated the provisions of the Exchange Act that SEC Press Release prohibit fraud by broker-dealers and government securities dealers. Ordered 2003-107 Goldman, Sachs to disgorge $1,742,642 in bond trading profits and prejudgment interest and to pay a penalty of $5 million. John M. Youngdahl, vice president 9/04/03 (F) SEC filed securities fraud charges alleging that he traded the 30-year bond using SEC Press Release confidential information from the Treasury Department. 2003-107 11/12/03 (S) John M. Youngdahl settled the commission's pending insider trading charges against SEC Press Release him. He will be permanently enjoined from committing securities fraud and will pay 2003-155 a civil penalty of $240,000. H. D. Vest Investment Securities, Inc. 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $725,216. Halliburton Co. 8/3/04 (S) The SEC announced enforcement proceedings against Halliburton, Muchmore, and SEC Press Release Morris in response to Halliburton's failure to disclose a 1998 change to its 2004-104 accounting practice. As a result of that undisclosed change, Halliburton's public statements about its income in 1998 and 1999 were materially misleading. Robert C. Muchmore, Jr., controller Halliburton and Muchmore agreed to settle the enforcement actions by consenting to a commission order to cease and desist from committing future securities law violations and agreed to pay penalties of $7.5 million and $50,000, respectively, in related civil action. Gary V. Morris, CFO 8/3/04 (F) The enforcement action against Morris is unsettled, and it has been filed in the U.S. District Court in Houston, Texas. CRS-13 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) HealthSouth 3/18/03 (F) SEC charges were based on overstatement of reported earnings by at least $1.4 SEC Press Release billion since 1999. Assets of CEO Richard Scrushy were frozen by court order. 2003-38 Richard Scrushy, CEO 3/19/03 (F) Charged with accounting fraud by the SEC, which seeks monetary penalties and a SEC Press Release bar from serving as an officer or director of a public company. 2003-34 Heartland Advisors, Inc. 12/11/03 (F) Charged by the SEC with misrepresentations, mispricing, and insider trading in two SEC Press Release Heartland Group high yield bond funds. 2003-171 William Nasgovitz, CEO Paul Beste, COO Jilaine Bauer, general counsel Kevin Clark, senior vice president Kenneth Della, treasurer Thomas Conlin, portfolio manager Greg Winston, portfolio manager Hugh Denison, associate director John Hammes, independent director Gary Shilling, independent director Allen Stefl, independent director Linda Stephenson, independent director FT Interactive Data Corp., independent pricing service Raymond Krueger, client CRS-14 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Homestore Inc. John Giesecke, Jr., CEO 9/25/02 (S) SEC charged that Homestore's revenues were fraudulently overstated by 60% during SEC Press Release 2001. The three individuals agreed to pay fines totaling about $5 million, and were 2002-141 Joseph J. Shew, CFO barred from serving as officers or directors of public companies. John DeSimone, vice president Jeffrey Kalina,a senior manager 1/9/03 (S) Charged by the SEC with financial fraud scheme. Agreed to settle with the SEC Litigation commission and cooperate with the government in its investigation. Release No. 17924 Thomas Vo,a manager 9/18/03 (S) The SEC charged the defendants variously with violating or aiding and abetting SEC Press Release violations of numerous provisions of the federal securities laws. 2003-120 Sailesh Patel,a director of business development Jessica McLellan,a manager Sophia M. Kabler, senior vice president Adam S. Richards, manager of financial planning David Slayton, CFO of NameProtect, Inc. Brian Wiegand, CEO of NameProtect, Inc. Household International 3/19/03 (S) The SEC charged Household International filing with false and misleading SEC Press Release accounting statements regarding delinquent loans. Household agreed to cease and 2003-35 desist from these accounting practices. CRS-15 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) i2 Technologies, Inc. 6/9/04 (S) The SEC brought enforcement proceedings against i2 Technologies, Inc., for SEC Press Release misstating approximately $1 billion of software license revenues, including more 2004-81 than $125 million of revenues it should never have recognized, over a nearly five- year period that ended in 2002. i2 agreed to settle the enforcement proceedings by consenting to a cease-and-desist order and to pay a $10 million penalty in a related civil action filed in U.S. District Court. The entire penalty proceeds will be distributed to injured i2 shareholders. ICN Pharmaceuticals 12/29/02 (S) SEC securities fraud charges were settled when ICN agreed to comply with detailed Hepatitis Weekly, corporate governance and disclosure-related undertakings for a period of five years 13/03/02, p. 21 and to pay a $1 million fine. ImClone Systems Samuel Waksal, CEOa 6/12/02 (F) SEC charged Waksal with insider trading and sought disgorgement and a bar from SEC Press Release serving as an officer or director of a public company. Waksal settled the suit by 2002-87 agreeing to pay about $800,000 and submitting to the bar on being an officer/director. 3/11/03 (S) 1/19/05 (S) Without admitting or denying the allegations in the Commission's complaint, SEC Press Release Samuel Waksal consented to pay a civil penalty of $3,017,464 and is currently 2005-9 serving 87 months in federal prison in connection with the facts giving rise to the Commissions's complaint in this action. Jack Waksal 10/10/03 (F) SEC charged Jack Waksal with trading ImClone Systems stock as a result of insider SEC Litigation information provided by his son, Samuel Waksal. Release No. 18408 1/19/05 (S) Without admitting or denying the allegations in the Commission's complaint, Jack SEC Press Release Waksal consented to pay a disgorgement and prejudgment interest of $2,019,030 2005-9 and be permanently enjoined from violating the antifraud provisions of the federal securities laws. InterBank Funding Corp. 7/23/02 (F) The SEC filed fraud charges relating to the concealment of losses in a group of Wall Street Journal, mutual funds. 7/24/02, p. C12 Simon A. Hershon, CEO CRS-16 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Invesco Funds Group, Inc. (IFG) 12/2/03 (F) The SEC announced civil fraud charges against IFG and Cunningham. According SEC Press Release to the charges, IFG and Cunningham fraudulently accepted investments by dozens 2003-167 Raymond R. Cunningham, CEO and of market timers in Invesco Mutual funds to enhance the management fees earned president by IFG. Timothy J. Miller, chief investment officer 8/31/04 (S) The SEC settled enforcement actions against Miller, Kolbe, and Legoski. The SEC Press Release (IFG) commission issued orders alleging that they violated federal securities laws by 2004-123 facilitating widespread market timing trading in certain Invesco funds in contravention of those funds' public disclosures. The commission ordered Miller, Thomas A. Kolbe, national sales manager Kolbe, and Legoski to pay $1 in disgorgement each and penalties in the amounts of (IFG) $150,000, $150,000, and $40,000, respectively, and prohibited them from associating with an investment adviser or investment company for a period to one Michael D. Legoski, assistant vice president year. (IFG) J. P. Morgan Chase & Co. 7/28/03 (S) Settled charges by the SEC regarding its role in Enron Corp.'s manipulation of its SEC Press Release financial statements. J.P. Morgan Chase was ordered to pay $135 million as 2003-87 disgorgement, penalty, and interest. JB Oxford Holdings, Inc. (JBOH) 8/25/04 (F) The SEC filed civil fraud charges against NCC, its parent company JBOH, and three SEC Press Release National Clearing Corporation (NCC) executives for facilitating late trading and market timing by certain NCC customers. 2004-119 The SEC's complaint alleges that from June 2002 until September 2003, the James G. Lewis, president and COO (JBOH) defendants fraudulently facilitated thousands of market timing and late trades in over 600 mutual funds. Kraig L. Kibble, director of operations (NCC) James Y. Lin, vice president (NCC) Janus Capital Management LLC (JCM) 8/18/04 (S) The SEC announced today a settled enforcement action against JCM for entering SEC Press Release into undisclosed market timing agreements with certain investors. The commission 2004-111 ordered JCM to pay a disgorgement of $50 million and civil penalties of $50 million, for a total payment of $100 million. JCM also consented to a cease-and- desist order and a censure, and agreed to undertake certain compliance and mutual- fund governance reforms. CRS-17 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) KPMG 1/14/02 (S) The SEC censured KPMG for violating auditor independence rules by serving as SEC Press Release auditor for a company in which it had made substantial investments. 2002-4 KPMG 1/29/03 (F) The SEC charged KPMG and four individuals with permitting Xerox Corp. to SEC Press Release manipulate accounting practices to close a $3 billion gap between actual operating 2003-16 results and the results reported in published accounting statements. The four individuals were at various times leaders of the team that performed the Xerox audit. Michael A. Conway, senior partner 4/19/05 (S) The SEC announced that KPMG agreed to settle the SEC's charges against it in SEC Press Release connection with the audits of Xerox Corp. from 1997 through 2000. KPMG will pay 2005-59 disgorgement of $9,800,000, prejudgment interest thereon in the amount of $2,675,000, and a $10,000,000 civil penalty, for a total payment of $22,475 million. The final judgment also orders KPMG to undertake a series of reforms designed to Joseph T. Boyle, managing partner prevent future violations of securities laws. 10/6/05 (S) The SEC agreed to settle its charges against Joseph T. Boyle. Boyle has been SEC Press Release ordered to pay a civil penalty in the amount of $100,000 and be permanently 2005-144 enjoined from violating the provision of the federal securities laws that require Anthony P. Dolanski, partner reporting of likely illegal acts to a company's audit committee, its board of directors and ultimately to the Commission. 2/22/06 (S) The SEC agreed to settle its charges against Michael A. Conway, Anthony P. SEC Press Release Dolanski, and Ronald A. Safran. Safran and Conway will each pay a civil penalty 2006-23 Ronald A. Safran, partner in the amount of $150,00, and Dolanski will pay a penalty in the amount of $100,000. Additionally, Safran, Conway and Dolanski will be suspended from appearing or practicing before the SEC as accountants. Safran will be suspended with a right to reapply in three years, Conway in two, and Dolanski in one. Kirkpatrick, Pettis, Smith, Polian Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $39,935. Kmart Joseph A. Hofmeister, vice president 2/26/03 (F) The SEC charged the two with accounting fraud and seeks disgorgement of ill- Wall Street Journal, gotten gains and money penalties. 2/27/03, p. A3 Enio A. Montini Jr., vice president CRS-18 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Legg Mason Wood Walker, Inc. 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $2,315,467. Lehman Brothers Inc. 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of research reports not based on principles of fair dealing and good faith. 2003-54 Paid fines totaling $80 million. Lehman Brothers Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $123,882. Lernout & Hauspie 10/10/02 (F) SEC charged L&H with accounting fraud, related to overstatement of revenues by Boston Globe, at least $100 million. 10/11/02, p. E2 Linsco/Private Ledger Corp. 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $2,232,805. Lucent Technologies 2/27/03 (S) Lucent settled an SEC investigation into its accounting practices with a consent Wall Street Journal, agreement that did not require restatement of earnings or payment of a fine. 2/28/03, p. B7 5/17/04 (S) Lucent agreed to settle charges by the SEC of securities fraud, and violations of the SEC Press Release reporting, books and records, and internal control provisions of the federal securities 2004-67 laws. Without admitting or denying the allegations, Lucent agreed to pay a $25 million penalty for its lack of cooperation. Nina Aversano, officer 5/17/04 (F) Securities fraud SEC Press Release 2004-67 Jay Carter, officer Leslie Dorn, executive William Plunkett, executive 5/17/04 (S) Plunkett agreed to pay a civil penalty of $110,000 and to be permanently barred from acting as an officer or director of a public company. CRS-19 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) John Bratten, executive 5/17/04 (F) Securities fraud Deborah Harris, executive 5/17/04 (S) Harris will pay a civil penalty of $100,000 and has agreed to be barred from acting as an officer or director of a public company for five years. Charles Elliott, employee 5/17/04 (F) Securities fraud Michelle Hayes-Bullock, employee 5/17/04 (S) Securities fraud Vanessa Petrini, employee 5/17/04 (F) Petrini will pay a civil penalty of $60,000 and disgorge $109,505. Marque Millennium Group, Inc. 12/15/03 (S) The SEC charged Littell with defrauding investors and Meckel with failing SEC Press Release reasonably to supervise Littell. Littell and Meckel each settled the actions without 2003-172 Wilfred Meckel, principal admitting or denying the commission's findings. Robert T. Littell, director of investments Martha Stewart Living Omnimedia Martha Stewart, chairman and CEOa 6/4/03 (F) The SEC charged Stewart with illegal insider trading. SEC Press Release 2003-69 Peter Bacanovic, stockbrokera 6/4/03 (F) The SEC charged Bacanovic with securities fraud. SEC Press Release 2003-69 Massachusetts Financial Services Co. 2/5/04 (S) The SEC charged MFS and its chief executive officer, John W. Ballen, and its SEC Press Release (MFS) president and chief equity officer, Kevin R. Parke, with violating federal securities 2004-14 laws by allowing widespread market timing trading in certain MFS mutual funds in contravention of those funds' public disclosures. The commission censured MFS and ordered it to pay $225 million, consisting of $175 million in disgorgement and $50 million in penalties. John W. Ballen, CEO 2/5/04 (S) The commission prohibited Ballen and Parke from serving as officers or directors SEC Press Release of any investment adviser and from serving as employees, officers, or trustees of any 2004-14 registered investment company for three years. Additionally, each was ordered to Kevin R. Parke, president and chief equity pay a penalty of $250,000 and to disgorge more than $50,000 in ill-gotten gains officer derived from MFS's market timing practices. CRS-20 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Massachusetts Financial Services Co. 3/31/04 (S) The SEC announced a settled enforcement action against MFS related to the SEC Press Release (MFS) company's use of mutual fund assets to pay for the marketing and distribution of 2004-44 mutual funds in the MFS Fund Complex (MFS Funds). As part of the settlement, MFS agreed to a series of compliance reforms and to pay a penalty of $50 million, which will be distributed to the MFS Funds. Merrill Lynch 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of fraudulent research reports not based on principles of fair dealing and 2003-54 good faith. Paid fines totaling $200 million. Henry Blodgett, managing director and senior 4/26/03 (S) Charged by the SEC with issuing false research reports, Blodgett agreed to pay $4 SEC Press Release research analyst million and to be censured and barred from the securities industry for life. 2003-56 Robert S. Furst, senior executive 3/17/03 (F) The four are charged by the SEC with aiding and abetting accounting fraud at Enron SEC Press Release Corp., by engaging in fraudulent transactions designed to overstate Enron's 2003-32 Schuyler M. Tilney, senior executive earnings. Merrill Lynch (the firm) was also charged, but agreed to settle the charges by paying $80 million in disgorgement and penalties. Daniel H. Bayly, senior executive Thomas W. Davis, senior executive Morgan Stanley 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC of making SEC Press Release undisclosed payments for research reports. Paid fines totaling $125 million. 2003-54 12/03/02 (S) Paid a $1.65 million fine to settle SEC and NASD charges relating to failure to SEC Press Release retain e-mail records. 2002-173 11/17/03 (S) Settled charges by the SEC that they failed to provide customers important SEC Press Release information relating to their purchases of mutual fund shares. As part of the 2003-159 settlement, Morgan Stanley will pay $50 million in disgorgement to certain Morgan Stanley customers and will place on its website disclosures regarding the purchase of different mutual fund share classes. CRS-21 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Mutuals.com, Inc. 12/4/03 (F) Charged by the SEC with deceiving hundreds of mutual fund companies and their SEC Press Release shareholders by improperly helping institutional brokerage customers and advisory 2003-169 Richard Sapio, CEO clients carry out thousands of market timing trades and illegal late trades in shares of those mutual funds. Eric McDonald, president Michele Leftwich, compliance officer NewCom Sultan Warris Khan, CEO 6/09/02 (S) The three paid fines and were barred from serving as directors or officers of public Los Angeles Times, companies to settle SEC charges of securities fraud related to overstatement of 6/12/02, p. C4. Asif Mohammad Khan, vice president revenues. Steven Conrad Veen, CFO Nicor Energy, LLC Kevin M. Stoffer, president and CEO 12/10/03 (F) The SEC filed a civil enforcement action alleging that the executives inflated net SEC Press Release income by $11 million in 2001 by using an array of improper accounting tools for 2003-170 Andrew J. Johnson, director of financial the express purpose of hitting earnings targets. services John Fringer, vice president John F. Weir, director of gas services Performance Specialist Group LLC. 7/26/04 (S) The SEC found that between 1999 and 2003 the two firms, through particular SEC Press Release transactions by certain of their registered specialists, violated federal securities laws 2004-99 SIG Specialists, Inc. by executing orders for their dealer accounts ahead of executable public customer orders. The firms will pay a total of $5.2 million in penalties and disgorgement. CRS-22 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Pilgrim Baxter & Associates, Ltd. 11/20/03 (F) Charged with fraud and breach of fiduciary duty in connection with market timing SEC Press Release of the PBHG Funds. 2003-161 6/21/04 (S) The SEC ordered Pilgrim Baxter & Associates (PBA) to pay $90 million: $40 SEC Press Release million in disgorgement and $50 million in civil penalties. PBA consented to a 2004-84 censure and an order to cease and desist, and further agreed to undertake a series of compliance and mutual fund governance reforms. Gary L. Pilgrim, president, CIO 11/20/03 (F) Charged with fraud and breach of fiduciary duty in connection with market timing SEC Press Release of the PBHG Funds. 2003-161 Harold J. Baxter, CEO 11/17/04 (S) The SEC ordered Baxter and Pilgrim each to pay $80 million: $60 million in SEC Press Release disgorgement and $20 million in civil penalties, which will be distributed to injured 2004-157 investors, along with the $90 million that PBA paid. PIMCO Advisors Fund Management LLC 5/6/04 (F) Charged with defrauding PIMCO mutual fund investors, in connection with an SEC Press Release (PAFM) 9/13/04 (S) undisclosed market timing arrangement with Canary Capital Partners LLC. 2004-61 PEA Capital LLC (PEA) 9/15/04 (S) PIMCO Advisors Distributors LLC (PAD) The SEC settled charges that PAFM, PEA, and PAD defrauded investors in the SEC Press Release PIMCO Funds: Multi-Manager Series (MMS) in connection with an undisclosed 2004-127 Stephen J. Treadway, CEO of PAFM and market timing arrangement. The PIMCO entities were ordered to pay $50 million, PAD consisting of $10 million in disgorgement and a civil penalty of $40 million. The commission's litigation in federal court continues against Stephen J. Treadway and Kenneth W. Corba, CEO of PEA Kenneth W. Corba. PNC Financial Services Group 7/18/02 (S) Agreed to cease and desist from accounting improprieties resulting from transactions SEC Press Release with special purpose entities (SPEs). Approximately $762 million in bad loans and 2002-109 venture capital investments were transferred from PNC's books to SPEs. Concurrent with the SEC order, the Federal Reserve Bank of Cleveland executed a Written Agreement with PNC, relating to the same transactions. PricewaterhouseCoopers 7/17/02 (S) PwC and its brokerage affiliate settled SEC charges relating to violations of auditor SEC Press Release independence rules and agreed to a $5 million fine. 2002-105 CRS-23 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Putnam Investment Management LLC 10/28/03 (F) Engaged in securities fraud by failing to disclose to the funds or to the fund boards SEC Press Release the potentially self-dealing transactions in fund shares by Scott and Kamshad. 2003-142 11/13/03 (S) Agreed to undertake significant and far-reaching reforms in corporate governance, SEC Press Release compliance, and ethics. Putnam also agreed to a process for calculating and paying 2003-156 restitution for losses attributable to excessive short-term and market-timing trading by its employees. The amount of civil penalty and other monetary relief to be paid by Putnum remains open and will be determined at a later date. 4/8/04 (S) The SEC announced the final settlement (which supplements a Commission Order SEC Press Release entered on November 13, 2003) against Putnam. The firm has been ordered to pay 2004-49 a $50 million civil penalty and $5 million in disgorgement for violating federal securities laws by failing to disclose improper market timing trading by Putnam portfolio managers. All the money obtained by the commission will be distributed to investors harmed by the market timing trading. Justin M. Scott 10/28/03 (F) The SEC complaint alleges that for their own personal accounts Scott and Kamshad SEC Press Release engaged in excessive short-term trading of Putnam mutual funds for which they 2003-142 Omid Kamshad were portfolio managers, which violated their responsibilities to other fund shareholders. Qwest Communications 10/21/04 (S) The SEC charged Qwest with securities fraud and other violations of the federal SEC Press Release securities laws. Without admitting or denying the allegations in the complaint, 2004-148 Qwest consented to entry of judgment from violating the antifraud provisions of the federal securities laws and was directed to pay a civil penalty of $250 million and $1 disgorgement. The entire penalty amount will be distributed to defrauded investors. Joel Arnold, vice president 2/25/03 (F) The eight individuals are charged by the SEC with engaging in civil fraud by SEC Press Release inflating Qwest's revenues by about $144 million in 2000 and 2001 through various 2003-25 Grant Graham, financial officer deceptive accounting practices. The SEC seeks monetary penalties and/or bars from serving as officers or directors of public companies. Thomas W. Hall, vice president Bryan Treadway, assistant controller John M. Walker, vice president CRS-24 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Douglas K. Hutchins, director Richard L. Weston, vice president William L. Eveleth, vice president for finance Raymond James Financial Services, Inc. 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $2,595,129. Raytheon 11/25/02 (S) Agreed to cease and desist from violations of the SEC's Regulation FD, which Boston Herald, prohibits selective disclosure of financial results. The company was not fined. 11/26/02, p. 31 Reliant Resources 1/31/03 (S) Agreed to a $13.8 million fine to settle a FERC investigation into evidence that Orange County Reliant withheld power to drive up electricity prices in California on June 21 and 22, Register, 2/11/02, p. 2000. OC Register 1 Rite Aid Martin Grass, CEO 6/21/02 (F) The SEC filed charges of accounting fraud, based on massive overstatement of Los Angeles Times, financial results from 1997 through 1999. The SEC seeks disgorgement of bonuses 6/22/02, p. A1. Frank Bergonzi, CFO and civil penalties and a bar from serving as officers or directors of a public company. Franklin Brown, vice chairman Robertson Stephens 1/09/03 (S) The SEC's charges relate to the allocation of stock in "hot" initial public offerings SEC Press Release during 1999 and 2000. In exchange for receiving allocations (i.e., being allowed to 2003-3 buy offered shares), more than 100 customers paid millions of dollars in the form of excessive commissions. Robertson Stephens paid $28 million to settle the charges. Paul Johnson, senior research analyst 1/09/03 (F) Charged by the SEC with issuing fraudulent research reports and failing to disclose significant conflicts of interest. SWS Financial Services 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $66,468. CRS-25 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Safety-Kleen Paul R. Humphreys, CFO 12/12/02 (F) Charged by the SEC with financial fraud related to overstatement of net income by SEC Litigation $534 million between 1997 and 1999. Complaint seeks disgorgement and officer Release No. 17891 William D. Ridings, controller and director bars. Kenneth W. Winger, CEO Thomas W. Ritter, Jr., vice president 12/12/02 (S) Enjoined from violating securities laws. Susan Moore, financial reporting manager Agreed to cease and desist from violations of securities fraud and reporting laws. Salomon Smith Barney 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of fraudulent research reports and improper allocation of "hot" initial 2003-54 public offerings of stock. Paid fines totaling $400 million. 12/03/02 (S) Paid a $1.65 million fine to settle SEC and NASD charges relating to failure to SEC Press Release retain e-mail records. 2002-173 Jack Grubman, managing director and 4/28/03 (S) Charged by SEC, NASD, NYSE, and New York state with issuing fraudulent and SEC Press Release research analyst misleading research reports; agreed to pay $15 million fine. 2003-55 Schering-Plough Corp. 9/9/03 (S) Charged by the SEC with violating the disclosure requirements of Regulation FD SEC Press Release and Section 13(a) of the Securities Exchange Act of 1934. In settling the charges, 2003-109 Schering agreed to pay a $1 million civil penalty and to cease and desist from committing such violations in the future. Richard J. Kogan, chairman of the board and 9/9/03 (S) Agreed to cease and desist from causing any violation of Regulation FD in the future SEC Press Release CEO and to pay $50,000 as a civil penalty. 2003-109 Security Brokerage, Inc. 12/23/03 (F) Charged by the SEC for participating in a scheme to defraud mutual fund SEC Press Release shareholders through improper late trading and market timing principally through 2003-183 Daniel Calugar, president mutual funds managed by Alliance Capital Management and Massachusetts Financial Services. CRS-26 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Security Trust Company, N.A. 11/25/03 (F) Charged by the SEC with facilitating and participating in fraudulent mutual fund late SEC Press Release trading and market timing schemes by a group of related hedge funds. 2003-164 Grant D. Seeger, CEO William A. Kenyon, president Nicole McDermott, senior vice president Southwest Securities, Inc. 2/12/04 (S) The NASD settled enforcement actions for failure to deliver mutual fund breakpoint SEC Press Release discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate 2004-17 customers for the overcharges and will pay a fine of $36,971. Strong Capital Management, Inc. (SCM) 5/20/04 (S) Charged with allowing and, in the case of Strong, engaging in undisclosed frequent SEC Press Release trading in Strong mutual funds in violation of fiduciary duties to the Strong funds 2004-69 Richard S. Strong, founder and majority and their investors. The settled order requires the payment of more than $140 owner million in monetary remedies, and imposes regulated industry bars and other relief. Anthony J. D'Amato, executive vice Charged with aiding and abetting SCM's violations and is barred from association president with any investment adviser, investment company, broker, or dealer. Thomas A. Hooker, compliance officer Charged with aiding and abetting SCM's and Strong's violations by failing, after he learned of Strong's frequent trading, to follow up on a directive to monitor the trading and ensure that it stopped. Hooker has been barred from association with any investment adviser or investment company. Sunbeam Corp. Al Dunlap, CEO 9/03/02 (S) To settle SEC accounting fraud charges, the two agreed to pay fines totaling Knight Ridder $700,000 and were barred from serving as officers or directors of public companies. Tribune News Russell Kersh, CFO Service, 9/03/02 CRS-27 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Symbol Technologies, Inc. 6/3/04 (S) The SEC charged Symbol Technologies with securities fraud and related violations SEC Press Release of the federal securities laws. Symbol agreed to settle the case without admitting or 2004-74 denying the allegations and will pay a $37 million penalty for its conduct. Tomo Razmilovic, president and CEO 6/3/04 (F) The defendants engaged in a fraudulent scheme to inflate revenue, earnings, and other measures of financial performance in order to create the false appearance that Kenneth Jaeggi, senior management Symbol had met or exceeded its financial projections. Brian Burke, senior management Michael DeGennaro, senior management Frank Borghese, senior management Christopher DeSantis, executive James Heuschneider, executive Gregory Mortenson, executive James Dean, executive Robert Donlon, executive Leonard Goldner, general counsel Leonard Goldner manipulated stock option exercise dates to enable certain senior executives, including himself, to profit unfairly at the company's expense. TD Waterhouse Investor Services, Inc. 9/21/04 (S) The SEC filed settled civil charges against TD Waterhouse Investor Services, Inc., SEC Press Release for making undisclosed cash payments to three investment advisers to encourage 2004-133 Kiely Financial Services, Inc., independent them to use TD Waterhouse for their clients' brokerage business. In settling the investment adviser matter, TD Waterhouse agreed to pay a $2 million penalty, among other remedies. The commission also announced related fraud actions against the three investment Rudney Associates, Inc., independent advisers and their principals for their failures to disclose the cash payments. Two investment adviser of the investment advisers, Kiely Financial Services and Rudney Associates, agreed to settle the charges without admitting or denying the findings. Brandt, Delly & Simmons, LLC, independent investment adviser Trump Hotels & Casino Resorts 1/16/02 (S) Agreed to cease and desist from making misleading statements in pro forma SEC Press Release accounting releases. 2002-6 CRS-28 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Tyco International L. Dennis Kozlowski, CEO 9/12/02 (F) SEC filed civil fraud charges seeking restitution of compensation and loans and SEC Press Release money penalties. The SEC charged that the three treated Tyco as their private bank, 2002-135 Mark H. Swartz, CFO taking out hundreds of millions of dollars of loans and compensation without telling investors. Mark A. Belnick, chief legal officer Frank E. Walsh, Jr., director 12/17/02 (S) Charged with concealing a $20 million finder's fee received from Tyco in SEC Press Release connection with a 2001 merger. Walsh agreed to repay the $20 million to settle the 2002-177 charge. UBS Financial Services Inc. 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $4,621,768. UBS Warburg 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of research reports not based on principles of fair dealing and good faith, 2003-54 and for receiving undisclosed payments for research. Paid fines totaling $80 million. United Currency Group, Inc (UCG) 11/19/03 (F) The SEC filed a complaint that alleged that Adam Swickle conducted a fraudulent SEC Litigation offering of United Currency Group, Inc.'s securities from May 2001 through Release No. 18471 Adam Swickle, CEO December 2002 and raised approximately $774,000 from 21 investors. U.S. Bancorp Piper Jaffray 4/28/03 (S) Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating to SEC Press Release issuance of research reports not based on principles of fair dealing and good faith, 2003-54 and for receiving undisclosed payments for research. Paid fines totaling $32.5 million. 12/03/02 (S) Paid a $1.65 million fine to settle SEC and NASD charges relating to failure to SEC Press Release retain e-mail records. 2002-173 CRS-29 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) U.S. Foodservice (subsidiary of Royal Ahold) Michael Resnick, CFO 7/27/04 (F) The SEC alleges that Resnick, Kaiser, Lee, and Carter engaged in or substantially SEC Press Release participated in a scheme to overstate the income of Royal Ahold by $700 million or 2004-100 Mark P. Kaiser, chief marketing officer more for at least FY2001 and FY2002. The complaint alleges that they grossly inflated reported profits and induced numerous suppliers to submit false Timothy J. Lee, executive vice president confirmations to the company's auditors in order to conceal their fraud. William Carter, vice president Van Wagoner Capital Management, Inc. 8/26/04 (S) The SEC filed settled fraud charges against VWCM and Garrett Van Wagoner SEC Press Release (VWCM) relating to their misstatement of the valuations of certain securities held by the Van 2004-122 Wagoner Funds. The settlement includes an $800,000 penalty from Van Wagoner and VWCM, a seven-year prohibition on Van Wagoner's serving as an officer or director of a mutual fund, and a seven-year restriction on certain of Van Wagoner's activities with the investment adviser (VWCM). Garrett Van Wagoner, president Vivendi Universal, S.A. 12/23/03 (S) Settled charges by the SEC that included false press releases, improper adjustments SEC Press Release to earnings, and failure to disclose future financial commitments. Vivendi is 2003-184 Jean-Marie Messier, CEO required to pay a civil money penalty in the amount of $50 million. Messier is required to relinquish his claim to a severance package of about $38 million and to pay a civil money penalty of $1 million. Hannezo is required to disgorge $148,149 Guillaume Hannezo, CFO and pay a penalty of $120,000. Wachovia Securities, LLC 2/12/04 (S) The SEC and the NASD settled enforcement actions for failure to deliver mutual SEC Press Release fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm 2004-17 agreed to compensate customers for the overcharges and will pay a fine of $4,844,465. CRS-30 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Waste Management Inc. Dean L. Buntrock, founder and CEO 3/26/02 (F) The SEC charged the six with accounting fraud -- a systematic scheme to falsify SEC Press Release and misrepresent the company's financial results between 1992 and 1997. The SEC 2002-44 Phillip B. Rooney, chief operating officer seeks disgorgement of ill-gotten gains, money penalties, and bars the six from serving as officers or directors of a public company. James E. Koenig, CFO Thomas C. Hau, controller Herbert Getz, general counsel Bruce D. Tobecksen, vice president West Coast Power 12/19/02 (S) CFTC settled charges that West Coast and Dynegy manipulated the price of natural CFTC Release gas by reporting false price and volume information. West Coast agreed to cease 4728-02 and desist from further violations and to pay a $5 million fine. WorldCom (became MCI on 4/20/04) 6/26/02 (F) The SEC charged that WorldCom overstated its earnings between 1999 and 2002 as SEC Litigation 5/19/03 (S) a result of improper accounting practices. WorldCom agreed to pay a fine of $500 Release 18147 million, pending bankruptcy court approval. David F. Myers, controller 9/26/02 (F) Barred from serving as an officer or director of a public company; monetary penalties pending. Buford Yates, Jr., director of accounting 10/02/02 (F) Barred from serving as an officer or director of a public company; suspended from practicing accounting before the SEC; monetary penalties pending. Betty Vinson, accountant 10/10/02 (F) Suspended from practicing accounting before the SEC; monetary penalties pending. Troy M. Normand, accountant 10/10/02 (F) Suspended from practicing before the SEC; monetary penalties pending. Scott D. Sullivan, CFO 3/2/04 (F) Charged with engaging in a fraudulent scheme to conceal WorldCom's poor SEC Press Release financial performance. 2004-25 CRS-31 Date Civil Action Filed (F) Company/Individual/Event Charges Source or Settled (S) Xerox 4/11/02 (S) Agreed to pay a $10 million fine to settle SEC charges that it used fraudulent SEC Press Release accounting to overstate its earnings between 1997 and 2000. 2002-52 Paul A. Allaire, CEO 6/5/03 (S) The six defendants agreed to pay more than $22 million in penalties, disgorgement, SEC Press Release and interest, without admitting or denying the SEC's allegations of securities fraud 2003-70 G. Richard Thoman, president and aiding and abetting Xerox's violations of the reporting, books and records, and Barry D. Romeril, CFO internal control provisions of the federal securities laws. Philip D. Fishbach, controller Daniel S. Marchibroda, asst. controller Gregory B. Tayler, controller Source: The government agencies' press releases are accessible on their websites: SEC at [http://www.sec.gov/news/press.shtml], CFTC at [http://www.cftc.gov/cftc/cftcpressoffice.htm] and FERC at [http://www.ferc.gov/press-room/press-releases.asp]. Abbreviations: NASD (National Association of Securities Dealers), NYSE (New York Stock Exchange), and NASAA (North American Securities Administrators Association) a. Cases also resulted in criminal indictments, some followed by guilty pleas. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL31961