The U.S. Securities and Exchange Commission (SEC) announced the settlement of charges against former officers of Sunbeam Corporation. The company's former CEO and CFO agreed to pay civil penalties and are permanently barred from serving as officers or directors of any public company.
According to the SEC's complaint, Sunbeam's ex-officers:
- Created and used "cookie-jar" reserves and recognized revenue for "bill and hold sales" that did not meet applicable accounting rules.
- Failed to disclose that the company's revenue growth was, in part, achieved at the expense of future results through a practice known as "channel stuffing."
- Misrepresented the company's performance and future prospects in a 10-Q, offering materials in connection with a bond offering, press releases, and communications with analysts.
The case involves filings and financial reporting dating back to 1996 through 1998.
In addition to civil penalties of $500,000 and $200,000, the ex-CEO and ex-CFO also paid $1.5 million and $250,000 out of their own funds to settle a related class action. Neither of the former officers sold Sunbeam stock or received performance-based bonuses during the relevant period.