Symbol Technologies to Pay $37M SEC Fine for Accounting Fraud

On Thursday, the Securities and Exchange Commission charged Symbol Technologies, Inc. with securities fraud and related violations of the reporting, record-keeping and internal control provisions of the federal securities laws. Eleven former Symbol executives were also charged in connection with their roles in the fraud.

The SEC's complaint alleges that from at least 1998 until early 2003, Symbol and the other defendants engaged in numerous fraudulent accounting practices and other misconduct that had a cumulative net impact of over $230 million on Symbol's reported revenue and over $530 million on its pre-tax earnings.

Symbol agreed to settle the case without admitting or denying the allegations. As part of the settlement, Symbol agreed to pay a $37 million penalty for its conduct. The entire penalty amount will be distributed to injured investors.

"The scope and magnitude of the fraud at Symbol Technologies warrant the imposition of significant penalties — not just against individual wrongdoers, but also against the company responsible for having created and fostered the environment in which the wrongdoing took place," said Stephen M. Cutler, Director of the Commission's Division of Enforcement. "And while the company ultimately did cooperate with the government -- and received credit for having done so — its initial response to our investigation further harmed investors by delaying exposure of the fraud and allowing it to continue longer than it otherwise might have."

"This case presents another unfortunate example of deliberate misconduct at a public company and underscores the Commission's commitment to rooting out fraudulent financial reporting," added George N. Stepaniuk, Assistant Regional Director in the Commission's Northeast Regional Office in New York. "When companies deliberately falsify financial results to meet pre-determined targets, as Symbol did repeatedly, they commit securities fraud. They and the individuals who perpetrate such frauds will be held responsible for the harm they cause investors."

Symbol has agreed to the following relief:

  • a permanent injunction against future violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws.
  • a civil penalty of $37 million and nominal disgorgement of $1, all of which will be distributed to injured investors.
  • various remedial measures, including the appointment of an independent examiner to review Symbol's accounting practices and internal control systems and assess the status of remedial actions undertaken or planned by the company in those and other areas, such as corporate governance.

Dean has also agreed, without admitting or denying the allegations, to the imposition of the non-monetary relief sought by the Commission. Specifically, he has agreed to a permanent injunction against committing, or aiding and abetting, future violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws.
The Commission's claims for disgorgement and civil penalties against Dean, and all of its claims against the other individual defendants, remain pending.

You may like these other stories...

As mentioned in today’s “Bramwell’s Lunch Beat” via an article from the USA Today, a new report from the Treasury Inspector General for Tax Administration (TIGTA) found that the IRS doled out $2.8...
London Stock Exchange switches auditing to EYThe London Stock Exchange will drop PwC as its auditor and replace it with EY after completion of the audit for the year ending March 2014, Harriet Agnew of the Financial Times...
With tax season in the past, it's time to think about the tax implications of decisions your clients may be making about their homes in 2014. The rules are complicated and because of the huge amounts involved, the...

Upcoming CPE Webinars

Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
May 1
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.