Civil Charges in Corporate Scandals

CRS Report for Congress
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
In troduction ......................................................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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
ms Harkness, Inc.8/25/04 (S)The SEC announced that it had settled enforcement actions against the seven broker-SEC Press Release
an, Billings, Ramsey & Co., Inc.dealers for failing to disclose that they had received payments for providing research2004-117
ney Montgomery Scott LLCcoverage of certain public companies, in violation of the Securities Act of 1933.
organ Keegan & Co., Inc.Pursuant to the enforcement actions, the seven firms will pay penalties totaling
edham & Company, Inc.$3,650,000.
udential Equity Group, LLC
Cowen & Co., Inc.
Communications7/24/02 (F)The SEC charges that Adelphia and the named individuals (1) fraudulentlySEC Press Release
concealed corporate liabilities by placing them on the books of off-balance-sheet2002-110
iki/CRS-RL31961entities, (2) falsified reported financial results, and (3) concealed rampant self-
g/wdealing, including diversion of corporate funds to private uses. Disgorgement of ill-hn J. Rigas, founder
s.orgotten gains and a bar from service as officers or directors of public companies are
leaksought.mothy J. Rigas
://wiki
httpichael J. Rigas4/25/05 (S)The SEC announced that it had reached an agreement to settle a civil enforcementaction against Adelphia Communications Corporations, its founder, John J. Rigas,SEC Press Release2005-63
and his three sons, Timothy J. Rigas, Michael J. Rigas, and James P. Rigas. Undermes P. Rigas
the settlement agreement, the Rigas family members will forfeit in excess of $1.5mes R. Brown, senior executive
billion in assets that they derived from the fraud, including the Rigas familys
interests in certain cable properties and will pay $715 million into a victim fund.ael C. Mulcahy, senior executive
nce Capital Management L.P.12/18/03 (S)The SEC settled enforcement action against Alliance Capital for defrauding mutualSEC Press Release
fund investors by allowing market timing in certain of its mutual funds in exchange2003-176
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.
erican Express Financial Advisors Inc.2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17


agreed to compensate customers for the overcharges and will pay a fine of
$3,706,693.

CRS-3
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
hur Andersen
illip E. Harlow, senior partner1/27/03 (S)Settled charges by the SEC relating to Harlows work at Sunbeam Corp. HarlowWashington Post,
was barred from practicing accounting before the SEC for three years.1/28/03, p. E1
nc of America Capital Management,2/9/05 (S)The SEC settled enforcement actions against BACAP, BACAP Distributors, andSEC Press Release
C (BACAP)BAS for entering into improper and undisclosed agreements that allowed favored2005-16
large investors to engage in rapid short-term securities trading in certain Nations
rs, LLC (BACAPFunds mutual funds as well as unaffiliated mutual funds. The Commission ordered
ributors)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
nc of America Securities, LLC (BAS)shareholders that were harmed as a result of market timing and late trading.
iki/CRS-RL31961nc of America Securities LLC (BAS)3/10/04 (S)The SEC settled enforcement action against BAS for violations of the recordSEC Press Release
g/wkeeping and access requirements of securities laws. As part of the settlement, BAS2004-29
s.oragreed to a censure and a $10 million civil penalty.
leak
nc One Investment Advisors6/29/04 (S)The SEC settled enforcement action against BOIA and Mark A. Beeson. TheSEC Press Release
://wikirporation (BOIA)commission found that BOIA violated, and Beeson aided and abetted by allowing2004-90
httpexcessive short-term trading in One Group funds. The commission ordered BOIA
to pay disgorgement of $10 million and a civil penalty of $40 million and ordered Beeson, president and CEO of One
Beeson to pay a civil penalty of $100,000. oup Mutual Funds (One Group)
ar, Stearns & Co. Inc.4/28/03 (S)Settled charges by New York State, NASD, NASAA, NYSE, and SEC relating toSEC Press Release
se First Boston LLCissuance of research reports not based on principles of fair dealing and good faith.2003-54


ldman, Sachs & Co.The 10 firms will pay a total of $875 million in penalties ($387.5 million) and
hman Brothers Inc.disgorgement ($487.5 million).
organ Securities Inc.
errill Lynch, Pierce, Fenner & Smith,
Incorporated
organ Stanley & Co. Incorporated
tigroup Global Markets Inc. f/k/a
lomon Smith Barney Inc.
Warburg LLC
ancorp Piper Jaffray Inc.

CRS-4
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
ar, Stearns & Co. Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17
customers for the overcharges and will pay a fine of $280,469
ar Wagner Specialists LLC3/30/04 (S)The SEC and the NYSE announced the initiation and settlement of enforcementSEC Press Release
t, Inc.actions against five NYSE specialist firms. Through particular transactions by2004-42
Branche & Co., LLCcertain of their registered specialists, the firms violated federal securities laws and
ear, Leeds & Kellogg Specialists LLCexchange rules by executing orders for their dealer accounts ahead of executable
oolen Specialists USA, LLCpublic 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.
iki/CRS-RL31961 & Young Advisors, Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointdiscounts (volume discounts) during 2001 and 2002. The firm agreed to compensateSEC Press Release2004-17
g/wcustomers for the overcharges and will pay a fine of $31,224.
s.or
leakdgeway Capital Management9/15/04 (S)The SEC settled enforcement proceedings against Bridgeway and John Noland RyanSEC Press Release
Montgomery in connection with more than $4.4 million in illegal performance-based2004-131
://wikifees that Bridgeway charged to three of its mutual funds. The settlement requires
httpthat Bridgeway reimburse the affected fund shareholders $4,407,700, plushn Noland Ryan Montgomery, president
prejudgment interest of $458,764, and that Bridgeway and Montgomery pay
penalties of $250,000 and $50,000, respectively.
(Credit Suisse First Boston)4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC Press Release
issuance of fraudulent research reports and improper allocation ofhot” initial2003-54
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 hotSEC Press Release
initial public offerings of stock by paying fines totaling $100 million.2002-14
S Energy Corporation (CMS)3/17/04 (S)The SEC settled a fraud enforcement action against CMS and Terry Woolley inSEC Press Release
connection with more than $5 billion in deceptive round-trip energy trades that2004-38
grossly inflated CMS’s reported revenues. CMS and Woolley agreed to cease and
desist from committing or causing violations of the antifraud, reporting, books andrry Woolley, controller


records, and internal controls provisions of the federal securities laws. Woolley also
agreed to pay a $25,000 penalty.

CRS-5
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
eston D. Hopper, chief accounting officer3/17/04 (F)The SEC filed a civil suit for fraud and other securities law violations.
mela C. Pallas, chief executive of trading
b sid iar y
tional Inc. and Cendant Corporation (CUC merged with HFS Incorporated on 12/17/1997 to form Cendant Corporation)
alter A. Forbes, CUCs chairman and CEO2/28/01 (F)The SEC charged that Forbes and Shelton directed a massive financial fraud whileSEC Litigation
selling millions of dollars worth of the companys common stock.Release No. 16910
Shelton, CUCs president and chief
ing officer
smo Corigliano, CUC’s controller and5/14/04 (S)Cosmo Corigliano and his spouse must transfer assets that have an aggregate valueSEC Litigation
iki/CRS-RL31961of at least $14 million to a court-appointed receiver, as disgorgement of unjustRelease No. 18711
g/wenrichment from a long-running financial fraud that he helped supervise and direct
s.orduring his time at CUC International Inc., the corporate predecessor of Cendantgnes T. Corigliano, relief defendant
leakCorporation.
y Louise Scully, relief defendant
://wikimperial Bank of Commerce (CIBC)
http
ul A. Flynn, managing director2/03/04 (F)The SEC charged Paul A. Flynn with fraud for his role in financing unlawful mutualSEC Press Release
fund trading.2004-12
ank Quattrone, investment banker3/06/03 (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
rles Schwab & Co., Inc.9/14/04 (S)The SEC settled enforcement proceedings against Charles Schwab & Co., Inc. TheSEC Press Release
commission charged that Schwab allowed investment adviser customers to change2004-128


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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
tigroup, Inc.7/28/03 (S)Settled charges by the SEC regarding Citigroups role in Enron CorporationssSEC Press Release
manipulation of its financial statements and assistance it provided Dynegy Inc. in2003-87
manipulation of that companys financial statements. Citigroup was ordered to pay
$120 million as disgorgement, interest, and penalty. Of that amount, $101 million
pertains to Citigroups Enron-related conduct and $19 million pertains to the
Dynegy conduct.
lumbia Management Advisors, Inc.2/24/04 (F)The SEC charged that the firms allowed certain preferred mutual fund customers toSEC Press Release
lumbia Funds Distributor Inc.engage in short-term and excessive trading, while at the same time representing2004-20
publicly that it prohibited such trading.
ter Martin, national sales manager2/9/05 (S)The SEC settled an enforcement action against Columbia Management Advisors,SEC Press Release
iki/CRS-RL31961Inc., Columbia Funds Distributor, Inc., and Martin, Gustafson, and Palombo for theirrole in connection with undisclosed market timing arrangements in Columbia funds.2005-15
g/wThe Columbia entities will pay $140 million, all of which will be distributed toik Gustafson, Columbia portfolio manager
s.orinvestors harmed by the conduct. Martin will pay $10,000 in disgorgement and a
leak$50,000 penalty, Gustafson and Palombo will each pay a $100,000 penalty.eph Palombo, chief operating officer
://wikiAdditionally, all three men will serve varying lengths of suspensions fromassociating with investment companies or acting as investment advisers. Tambonees Tambone, co-president
httpand Hussey were charged by the SEC with market timing arrangements that
benefited the executives but were detrimental to long-term fund shareholders.bert Hussey, sales executive
puter Associates International, Inc.9/22/04 (S)The SEC announced securities fraud charges against Computer AssociatesSEC Press Release
International, Inc. and three of the companys former top executives. The SEC2004-134
alleges that from 1998 to 2000, Computer Associates routinely kept its books open
to record revenue from contracts executed after the quarter ended in order to meetjay Kumar, CEO and chairmanDOJ Press Release
Wall Street quarterly earnings estimates. Computer Associates agreed to settlements642 (9/22/04)
with the SEC and the Justice Department in which the company will pay $225en 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
to a permanent injunction and officer and director bar with monetary sanctions to beeven Woghin, general counsel


decided at a later point.

CRS-7
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
ap, Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17
customers for the overcharges and will pay a fine of $99,458.
Securities Corp.1/24/02 (S)Agreed to pay fines totaling about $6.3 million to settle SEC securities fraud charges relatingWall Street Journal,
to abusive trading on the NASDAQ stock market. 1/25/02, p. C9
eldon Maschler, trader1/14/03 (S)The four agreed to pay fines totaling about $53 million to settle SEC charges relatingWall Street Journal,
to abusive trading on the NASDAQ stock market.1/15/03, p. C1ffrey Citron, trader
ron Elbogen, CEO
he Zelcer, compliance officer
iki/CRS-RL31961
g/w
s.orerner Associates, Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
leakdiscounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17
customers for the overcharges and will pay a fine of $32,711.
://wiki
httpsche Bank Securities12/03/02 (S)Paid a $1.65 million fine to settle SEC charges relating to failure to retain e-mailSEC Press Release
records. 2002-173
negy Inc.9/24/02 (S)Settled SEC charges relating to improper and misleading accounting (relating toSEC Press Release
fictitiousround-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 ofCFTC Release
natural gas by reporting false price and volume information. Dynegy agreed to4728-02
cease and desist from further violations and pay a $5 million fine.
e S. Foster, vice president6/12/03 (F)Charged by the SEC with disregarding accounting advice from Dynegy’s outsideSEC Press Release
auditors, establishing secret side agreements to conceal their improper conduct, and2003-72
concealing transaction details from the company, the companys auditors, and themie Olis, vice president
investing public.len C. Sharkey, manager
ron Corp.



CRS-8
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
drew Fastow, chief financial officer10/02/02 (F)Based on charges of violations of antifraud, record keeping, and internal controlsSEC 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
with the Justice Departments Enron Task Force, which entered into a guilty plea1/14/04 (S)SEC Press Release
with Fastow on related criminal charges. In resolving the parallel civil and criminal2004-6
proceedings, Fastow has agreed to serve a 10-year sentence, to disgorge more than
$23 million, and to cooperate with the governments continuing investigation.
iki/CRS-RL31961
g/wael J. Kopper, corporate official8/21/02 (S)To settle SEC charges of securities fraud, related to misleading accounting practices,SEC Press Release
s.orKopper agreed to disgorge and forfeit about $12 million, and to be barred from2002-126
leakserving as an officer or director of a public company.
://wiki
http
nter Shively, natural gas trading supervisor3/13/03 (F)The CFTC charged Shively and Enron with manipulating natural gas prices andCFTC Release
operating an illegal futures exchange.4762-03
chard A. Causey, chief accounting officer1/22/04 (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 federalRelease No. 18551
securities laws.
ffrey K. Skilling, president, CEO, COO2/19/04 (F)Charged with violating, and aiding and abetting violations of, the antifraud, lying toSEC Press Release
auditors, periodic reporting, books and records, and internal controls provisions of2004-18
the federal securities laws.
la H. Rieker5/19/04 (S)The SEC charged Rieker with violating the antifraud provisions of the federalSEC Litigation
securities laws. Without admitting or denying the allegations, Rieker agreed to beRelease 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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
neth L. Lay, chairman and CEO7/8/04 (F)The SEC initiated civil charges against Lay for his role in a wide-ranging schemeSEC Press Release
to defraud by falsifying Enrons publicly reported financial results and making false2004-94
and misleading public representations about Enrons business performance and
financial condition.
ron Broadband Services, Inc.
nneth D. Rice, CEO3/12/03 (F)Charged with violating antifraud laws and personally reaping $150 million inSEC Press Release
5/01/03 unlawful profits. The suit seeks disgorgement and civil money penalties.2003-58
(F, amended)eph Hirko, CEO
vin P. Hannon, chief operating officer
iki/CRS-RL31961x Shelby, vice president
g/w
s.orer, vice president
leakin A. Howard, executive
://wikiael W. Krautz, executive
http
rokerage Services, LLC8/3/04 (S)The SEC and the New York Stock Exchange announced the initiation and settlementSEC Press Release
of enforcement actions against Fidelity Brokerage Services, LLC, as a result of the2004-103
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.
(forex) Futures11/18/03 (F)The U.S. Commodity Futures Trading Commission announced that it filed sixCFTC Release
separate federal injunctive actions, charging a total of 31 individuals and entities4867-03
with engaging in fraud in the sale and solicitation of illegal foreign currency futures
contracts. The CFTC actions resulted from participation in Operation WoodenNew 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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
lin Advisers, Inc.8/2/04 (S)The SEC announced that Franklin Advisers, Inc., an investment adviser firm in theSEC Press Release
fourth largest U.S. mutual fund complex, has agreed to pay $50 million and to2004-102
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 FranklinSEC Press Release
Templeton Distributors, Inc. alleging that Franklin, without proper disclosure, used2004-168
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
iki/CRS-RL31961certain compliance reforms.
g/wont Investment Advisors11/4/04 (S)The SEC charged Fremont, Tengler, and Adams with market timing. It also chargedSEC Press Release
s.orFremont for allowing mutual fund trades to be placed after the 4:00 p.m. market2004-153
leakclose. Fremont agreed to pay $4.146 million, and Tengler agreed to pay $127,000ncy Tengler, president and CEO11/4/04 (S)
://wikiand be suspended from the industry for six months to settle the Commissions fraudcharges. The civil action against Adams is still open.rry Adams, vice president11/4/04 (F)


http

CRS-11
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
teway, Inc.11/13/03 (S)The SEC charged that Gateway, Inc., violated the antifraud, reporting, and recordSEC Press Release
keeping provisions of the federal securities laws. Without admitting or denying the2003-157
commissions findings, Gateway consented to cease and desist from committing or
causing any violation or future violation of these provisions.
ffrey Weitzen, CEO11/13/03 (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
concealed from the investing public important information about the success ofn J. Todd, senior vice president, CFO
Gateways personal computer business in the second and third quarters of 2000.za, controller
mstar-TV Guide International, Inc.
iki/CRS-RL31961ry C. Yuen, CEO6/19/03 (F)Charged with securities fraud whereby the two overstated revenues and reported theSEC Press Release
g/winflated revenues to the investing public. The suit seeks antifraud injunctions, civil2003-75
s.ormoney penalties, disgorgement of ill-gotten gains, and a permanent bar from servicesie M. Leung, CFO
leakas an officer or director of a public company.
://wikiter C. Boylan, co-president1/5/04 (F)The SEC charged that these executives participated in Gemstar’s widespread andSEC Press Release
httpcomplex scheme to inflate its licensing and advertising revenue and to misleadinvestors about the companys true financial performance.2004-1
nathan B. Orlick, general counsel8/10/04 (S)The SEC agreed to settle with Peter C. Boylan. As part of the settlement, BoylanSEC Litigation
will consent to a fraud injunction, without admitting or denying the allegations in theRelease No. 18826
Commissions complaint, and will pay a total of $600,000 in disgorgement and civilaig Waggy, CFO


p e na lties.

CRS-12
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
ldman, Sachs4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC 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 toSEC Press Release
retain e-mail records.2002-173
9/04/03 (S)Charged Goldman, Sachs willfully violated the provisions of the Exchange Act thatSEC Press Release
prohibit fraud by broker-dealers and government securities dealers. Ordered2003-107
Goldman, Sachs to disgorge $1,742,642 in bond trading profits and prejudgment
interest and to pay a penalty of $5 million.
iki/CRS-RL31961hn M. Youngdahl, vice president9/04/03 (F)SEC filed securities fraud charges alleging that he traded the 30-year bond usingconfidential information from the Treasury Department.SEC Press Release2003-107
g/w
s.or11/12/03 (S)John M. Youngdahl settled the commission’s pending insider trading charges againstSEC Press Release
leakhim. He will be permanently enjoined from committing securities fraud and will pay2003-155
a civil penalty of $240,000.
://wiki
httpt Investment Securities, Inc.2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17
agreed to compensate customers for the overcharges and will pay a fine of $725,216.
lliburton Co.8/3/04 (S)The SEC announced enforcement proceedings against Halliburton, Muchmore, andSEC Press Release
Morris in response to Halliburtons failure to disclose a 1998 change to its2004-104
accounting practice. As a result of that undisclosed change, Halliburtons public
statements about its income in 1998 and 1999 were materially misleading.
Halliburton and Muchmore agreed to settle the enforcement actions by consenting. Muchmore, Jr., controller
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.
y V. Morris, CFO8/3/04 (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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
althSouth3/18/03 (F)SEC charges were based on overstatement of reported earnings by at least $1.4SEC Press Release
billion since 1999. Assets of CEO Richard Scrushy were frozen by court order.2003-38
ard Scrushy, CEO3/19/03 (F)Charged with accounting fraud by the SEC, which seeks monetary penalties and aSEC Press Release
bar from serving as an officer or director of a public company.2003-34
and Advisors, Inc.12/11/03 (F)Charged by the SEC with misrepresentations, mispricing, and insider trading in twoSEC Press Release
Heartland Group high yield bond funds.2003-171illiam Nasgovitz, CEO
ul Beste, COO
aine Bauer, general counsel
iki/CRS-RL31961vin Clark, senior vice president
g/wneth Della, treasurer
s.oromas Conlin, portfolio manager
leak
eg Winston, portfolio manager
://wikienison, associate director
http
n Hammes, independent director
y Shilling, independent director
Stefl, independent director
nda Stephenson, independent director
Interactive Data Corp., independent
icing service
ymond Krueger, client



CRS-14
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
estore Inc.
hn Giesecke, Jr., CEO9/25/02 (S) SEC charged that Homestore’s revenues were fraudulently overstated by 60% duringSEC Press Release
2001. The three individuals agreed to pay fines totaling about $5 million, and were2002-141
barred from serving as officers or directors of public companies.eph J. Shew, CFO
hn DeSimone, vice president
ffrey Kalina,a senior manager1/9/03 (S)Charged by the SEC with financial fraud scheme. Agreed to settle with theSEC Litigation
commission and cooperate with the government in its investigation.Release No. 17924
omas Vo,a manager9/18/03 (S)The SEC charged the defendants variously with violating or aiding and abettingSEC Press Release
violations of numerous provisions of the federal securities laws.2003-120a
iki/CRS-RL31961 Patel, director of business
g/welopment
s.orssica McLellan,a manager
leak
://wikiia M. Kabler, senior vice president
httpam S. Richards, manager of financial
nni ng
id Slayton, CFO of NameProtect, Inc.
ian Wiegand, CEO of NameProtect, Inc.
usehold International3/19/03 (S)The SEC charged Household International filing with false and misleadingSEC Press Release
accounting statements regarding delinquent loans. Household agreed to cease and2003-35


desist from these accounting practices.

CRS-15
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
echnologies, Inc.6/9/04 (S)The SEC brought enforcement proceedings against i2 Technologies, Inc., forSEC Press Release
misstating approximately $1 billion of software license revenues, including more2004-81
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.
aceuticals12/29/02 (S)SEC securities fraud charges were settled when ICN agreed to comply with detailedHepatitis Weekly,
corporate governance and disclosure-related undertakings for a period of five years13/03/02, p. 21
and to pay a $1 million fine.
iki/CRS-RL31961Clone Systems
g/wuel Waksal, CEOa6/12/02 (F)SEC charged Waksal with insider trading and sought disgorgement and a bar fromSEC Press Release
s.orserving as an officer or director of a public company. Waksal settled the suit by2002-87
leakagreeing to pay about $800,000 and submitting to the bar on being an
officer/director.
://wiki
http3/11/03 (S)
1/19/05 (S)Without admitting or denying the allegations in the Commissions complaint,SEC Press Release
Samuel Waksal consented to pay a civil penalty of $3,017,464 and is currently2005-9
serving 87 months in federal prison in connection with the facts giving rise to the
Commissions’s complaint in this action.
Waksal10/10/03 (F)SEC charged Jack Waksal with trading ImClone Systems stock as a result of insiderSEC Litigation
information provided by his son, Samuel Waksal.Release No. 18408
1/19/05 (S)Without admitting or denying the allegations in the Commissions complaint, JackSEC Press Release
Waksal consented to pay a disgorgement and prejudgment interest of $2,019,0302005-9
and be permanently enjoined from violating the antifraud provisions of the federal
securities laws.
erBank Funding Corp.7/23/02 (F)The SEC filed fraud charges relating to the concealment of losses in a group ofWall Street Journal,
mutual funds.7/24/02, p. C12
mon A. Hershon, CEO



CRS-16
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
esco Funds Group, Inc. (IFG)12/2/03 (F)The SEC announced civil fraud charges against IFG and Cunningham. AccordingSEC Press Release
to the charges, IFG and Cunningham fraudulently accepted investments by dozens2003-167
of market timers in Invesco Mutual funds to enhance the management fees earnedymond R. Cunningham, CEO and
by IFG. ident
mothy J. Miller, chief investment officer8/31/04 (S)The SEC settled enforcement actions against Miller, Kolbe, and Legoski. TheSEC Press Release
G)commission issued orders alleging that they violated federal securities laws by2004-123
facilitating widespread market timing trading in certain Invesco funds in
contravention of those funds’ public disclosures. The commission ordered Miller,omas A. Kolbe, national sales manager
Kolbe, and Legoski to pay $1 in disgorgement each and penalties in the amounts ofG)
$150,000, $150,000, and $40,000, respectively, and prohibited them from
associating with an investment adviser or investment company for a period to oneael D. Legoski, assistant vice president
iki/CRS-RL31961 year.G)
g/w
s.ororgan Chase & Co.7/28/03 (S)Settled charges by the SEC regarding its role in Enron Corp.’s manipulation of itsSEC Press Release
leakfinancial statements. J.P. Morgan Chase was ordered to pay $135 million as2003-87
://wikidisgorgement, penalty, and interest.
httpford Holdings, Inc. (JBOH)8/25/04 (F)The SEC filed civil fraud charges against NCC, its parent company JBOH, and threeSEC Press Release
tional Clearing Corporation (NCC)executives for facilitating late trading and market timing by certain NCC customers.2004-119
The SECs complaint alleges that from June 2002 until September 2003, the
defendants fraudulently facilitated thousands of market timing and late trades in overmes G. Lewis, president and COO (JBOH)
600 mutual funds. aig L. Kibble, director of operations (NCC)
mes Y. Lin, vice president (NCC)
nus Capital Management LLC (JCM)8/18/04 (S)The SEC announced today a settled enforcement action against JCM for enteringSEC Press Release
into undisclosed market timing agreements with certain investors. The commission2004-111


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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
G1/14/02 (S)The SEC censured KPMG for violating auditor independence rules by serving asSEC Press Release
auditor for a company in which it had made substantial investments.2002-4
G1/29/03 (F)The SEC charged KPMG and four individuals with permitting Xerox Corp. toSEC Press Release
manipulate accounting practices to close a $3 billion gap between actual operating2003-16
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.
chael A. Conway, senior partner4/19/05 (S)The SEC announced that KPMG agreed to settle the SEC’s charges against it inSEC Press Release
connection with the audits of Xerox Corp. from 1997 through 2000. KPMG will pay2005-59
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.
iki/CRS-RL31961The final judgment also orders KPMG to undertake a series of reforms designed toprevent future violations of securities laws. seph T. Boyle, managing partner
g/w
s.or10/6/05 (S)The SEC agreed to settle its charges against Joseph T. Boyle. Boyle has beenSEC Press Release
leakordered to pay a civil penalty in the amount of $100,000 and be permanently2005-144
://wikienjoined from violating the provision of the federal securities laws that requirereporting of likely illegal acts to a companys audit committee, its board of directorsthony P. Dolanski, partner
httpand 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 penalty2006-23
in the amount of $150,00, and Dolanski will pay a penalty in the amount ofnald A. Safran, partner
$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.
rkpatrick, Pettis, Smith, Polian Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17
customers for the overcharges and will pay a fine of $39,935.
art
eph A. Hofmeister, vice president2/26/03 (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
io A. Montini Jr., vice president



CRS-18
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
gg Mason Wood Walker, Inc.2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17
agreed to compensate customers for the overcharges and will pay a fine of
$2,315,467.
hman Brothers Inc.4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC Press Release
issuance of research reports not based on principles of fair dealing and good faith.2003-54
Paid fines totaling $80 million.
hman Brothers Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17
customers for the overcharges and will pay a fine of $123,882.
iki/CRS-RL31961ut & Hauspie10/10/02 (F)SEC charged L&H with accounting fraud, related to overstatement of revenues byBoston Globe,
g/wat least $100 million.10/11/02, p. E2
s.or
leaknsco/Private Ledger Corp.2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17
://wikiagreed to compensate customers for the overcharges and will pay a fine of
http $2,232,805.
cent Technologies2/27/03 (S)Lucent settled an SEC investigation into its accounting practices with a consentWall 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 theSEC Press Release
reporting, books and records, and internal control provisions of the federal securities2004-67
laws. Without admitting or denying the allegations, Lucent agreed to pay a $25
million penalty for its lack of cooperation.
a Aversano, officer5/17/04 (F)Securities fraudSEC Press Release
2004-67
y Carter, officer
slie Dorn, executive
illiam Plunkett, executive5/17/04 (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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
hn Bratten, executive5/17/04 (F)Securities fraud
Harris, executive5/17/04 (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.
arles Elliott, employee5/17/04 (F)Securities fraud
elle Hayes-Bullock, employee5/17/04 (S)Securities fraud
essa Petrini, employee5/17/04 (F)Petrini will pay a civil penalty of $60,000 and disgorge $109,505.
arque Millennium Group, Inc.12/15/03 (S)The SEC charged Littell with defrauding investors and Meckel with failingSEC Press Release
reasonably to supervise Littell. Littell and Meckel each settled the actions without2003-172
iki/CRS-RL31961admitting or denying the commissions findings.ilfred Meckel, principal
g/w
s.orbert T. Littell, director of investments
leakartha Stewart Living Omnimedia
://wikia Stewart, chairman and CEOa 6/4/03 (F)The SEC charged Stewart with illegal insider trading.SEC Press Release
http 2003-69
ter Bacanovic, stockbrokera6/4/03 (F)The SEC charged Bacanovic with securities fraud.SEC Press Release
2003-69
assachusetts Financial Services Co.2/5/04 (S)The SEC charged MFS and its chief executive officer, John W. Ballen, and itsSEC Press Release
FS)president and chief equity officer, Kevin R. Parke, with violating federal securities2004-14
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.
n W. Ballen, CEO2/5/04 (S)The commission prohibited Ballen and Parke from serving as officers or directorsSEC Press Release
of any investment adviser and from serving as employees, officers, or trustees of any2004-14
registered investment company for three years. Additionally, each was ordered to
pay a penalty of $250,000 and to disgorge more than $50,000 in ill-gotten gainsin R. Parke, president and chief equity
derived from MFSs market timing practices.cer



CRS-20
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
assachusetts Financial Services Co.3/31/04 (S)The SEC announced a settled enforcement action against MFS related to theSEC Press Release
FS)companys use of mutual fund assets to pay for the marketing and distribution of2004-44
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.
errill Lynch4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC Press Release
issuance of fraudulent research reports not based on principles of fair dealing and2003-54
good faith. Paid fines totaling $200 million.
nry Blodgett, managing director and senior4/26/03 (S)Charged by the SEC with issuing false research reports, Blodgett agreed to pay $4SEC Press Release
earch analystmillion and to be censured and barred from the securities industry for life.2003-56
iki/CRS-RL31961rst, senior executive3/17/03 (F)The four are charged by the SEC with aiding and abetting accounting fraud at EnronSEC Press Release
g/wCorp., by engaging in fraudulent transactions designed to overstate Enron’s2003-32
s.orearnings. Merrill Lynch (the firm) was also charged, but agreed to settle the chargesuyler M. Tilney, senior executive
leakby paying $80 million in disgorgement and penalties.
iel H. Bayly, senior executive
://wiki
httpomas W. Davis, senior executive
organ Stanley4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC of makingSEC 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 toSEC Press Release
retain e-mail records.2002-173
11/17/03 (S)Settled charges by the SEC that they failed to provide customers importantSEC Press Release
information relating to their purchases of mutual fund shares. As part of the2003-159


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
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
utuals.com, Inc.12/4/03 (F)Charged by the SEC with deceiving hundreds of mutual fund companies and theirSEC Press Release
shareholders by improperly helping institutional brokerage customers and advisory2003-169
clients carry out thousands of market timing trades and illegal late trades in shareschard Sapio, CEO
of those mutual funds.ic McDonald, president
ele Leftwich, compliance officer
Co m
ltan Warris Khan, CEO6/09/02 (S)The three paid fines and were barred from serving as directors or officers of publicLos Angeles Times,
companies to settle SEC charges of securities fraud related to overstatement of6/12/02, p. C4.
revenues.if Mohammad Khan, vice president
iki/CRS-RL31961
g/wen Conrad Veen, CFO
s.ornergy, LLC
leak
vin M. Stoffer, president and CEO12/10/03 (F)The SEC filed a civil enforcement action alleging that the executives inflated netSEC Press Release
://wikiincome by $11 million in 2001 by using an array of improper accounting tools for2003-170
httpthe express purpose of hitting earnings targets.drew J. Johnson, director of financial
rvices
hn Fringer, vice president
n F. Weir, director of gas services
ance Specialist Group LLC. 7/26/04 (S)The SEC found that between 1999 and 2003 the two firms, through particularSEC Press Release
transactions by certain of their registered specialists, violated federal securities laws2004-99
by executing orders for their dealer accounts ahead of executable public customerG Specialists, Inc.


orders. The firms will pay a total of $5.2 million in penalties and disgorgement.

CRS-22
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
Baxter & Associates, Ltd.11/20/03 (F)Charged with fraud and breach of fiduciary duty in connection with market timingSEC Press Release
of the PBHG Funds.2003-161
6/21/04 (S)The SEC ordered Pilgrim Baxter & Associates (PBA) to pay $90 million: $40SEC Press Release
million in disgorgement and $50 million in civil penalties. PBA consented to a2004-84
censure and an order to cease and desist, and further agreed to undertake a series of
compliance and mutual fund governance reforms.
L. Pilgrim, president, CIO11/20/03 (F)Charged with fraud and breach of fiduciary duty in connection with market timingSEC Press Release
of the PBHG Funds.2003-161
rold J. Baxter, CEO11/17/04 (S)The SEC ordered Baxter and Pilgrim each to pay $80 million: $60 million inSEC Press Release
iki/CRS-RL31961disgorgement and $20 million in civil penalties, which will be distributed to injuredinvestors, along with the $90 million that PBA paid.2004-157
g/w
s.orMCO Advisors Fund Management LLC5/6/04 (F)Charged with defrauding PIMCO mutual fund investors, in connection with anSEC Press Release
leak)9/13/04 (S)undisclosed market timing arrangement with Canary Capital Partners LLC.2004-61
A Capital LLC (PEA)9/15/04 (S)
://wikiCO Advisors Distributors LLC (PAD) The SEC settled charges that PAFM, PEA, and PAD defrauded investors in theSEC Press Release
httpPIMCO Funds: Multi-Manager Series (MMS) in connection with an undisclosed2004-127
market timing arrangement. The PIMCO entities were ordered to pay $50 million,en J. Treadway, CEO of PAFM and
consisting of $10 million in disgorgement and a civil penalty of $40 million. TheD
commissions litigation in federal court continues against Stephen J. Treadway and
Kenneth W. Corba.nneth W. Corba, CEO of PEA
Group7/18/02 (S)Agreed to cease and desist from accounting improprieties resulting from transactionsSEC Press Release
with special purpose entities (SPEs). Approximately $762 million in bad loans and2002-109
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.
aterhouseCoopers7/17/02 (S)PwC and its brokerage affiliate settled SEC charges relating to violations of auditorSEC Press Release
independence rules and agreed to a $5 million fine. 2002-105



CRS-23
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
tnam Investment Management LLC10/28/03 (F)Engaged in securities fraud by failing to disclose to the funds or to the fund boardsSEC 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 paying2003-156
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 OrderSEC Press Release
entered on November 13, 2003) against Putnam. The firm has been ordered to pay2004-49
a $50 million civil penalty and $5 million in disgorgement for violating federal
iki/CRS-RL31961securities laws by failing to disclose improper market timing trading by Putnamportfolio managers. All the money obtained by the commission will be distributed
g/wto investors harmed by the market timing trading.
s.or
leakstin M. Scott 10/28/03 (F)The SEC complaint alleges that for their own personal accounts Scott and KamshadSEC Press Release
engaged in excessive short-term trading of Putnam mutual funds for which they2003-142
://wikiid Kamshadwere portfolio managers, which violated their responsibilities to other fund
http shareholders.
est Communications10/21/04 (S)The SEC charged Qwest with securities fraud and other violations of the federalSEC 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
inve sto r s.
Arnold, vice president2/25/03 (F)The eight individuals are charged by the SEC with engaging in civil fraud bySEC Press Release
inflating Qwest’s revenues by about $144 million in 2000 and 2001 through various2003-25
deceptive accounting practices. The SEC seeks monetary penalties and/or bars fromt Graham, financial officer
serving as officers or directors of public companies.omas W. Hall, vice president
yan Treadway, assistant controller
hn M. Walker, vice president



CRS-24
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
uglas K. Hutchins, director
chard L. Weston, vice president
illiam L. Eveleth, vice president for finance
ond James Financial Services, Inc.2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17
agreed to compensate customers for the overcharges and will pay a fine of
$2,595,129.
eon11/25/02 (S)Agreed to cease and desist from violations of the SECs Regulation FD, whichBoston Herald,
prohibits selective disclosure of financial results. The company was not fined.11/26/02, p. 31
iki/CRS-RL31961
g/wources1/31/03 (S)Agreed to a $13.8 million fine to settle a FERC investigation into evidence thatOrange County
s.orReliant withheld power to drive up electricity prices in California on June 21 and 22,Register, 2/11/02, p.
leak2000.OC Register 1
://wiki
http Grass, CEO6/21/02 (F)The SEC filed charges of accounting fraud, based on massive overstatement ofLos Angeles Times,
financial results from 1997 through 1999. The SEC seeks disgorgement of bonuses6/22/02, p. A1.
and civil penalties and a bar from serving as officers or directors of a publicank Bergonzi, CFO
company.klin Brown, vice chairman
bertson Stephens1/09/03 (S)The SEC’s charges relate to the allocation of stock in hotinitial public offeringsSEC Press Release
during 1999 and 2000. In exchange for receiving allocations (i.e., being allowed to2003-3
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.
ul Johnson, senior research analyst1/09/03 (F)Charged by the SEC with issuing fraudulent research reports and failing to disclose
significant conflicts of interest.
inancial Services2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17


customers for the overcharges and will pay a fine of $66,468.

CRS-25
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
fety-Kleen
ul R. Humphreys, CFO12/12/02 (F)Charged by the SEC with financial fraud related to overstatement of net income bySEC Litigation
$534 million between 1997 and 1999. Complaint seeks disgorgement and officerRelease No. 17891
and director bars.illiam D. Ridings, controller
nneth W. Winger, CEO
omas W. Ritter, Jr., vice president12/12/02 (S)Enjoined from violating securities laws.
san Moore, financial reporting managerAgreed to cease and desist from violations of securities fraud and reporting laws.
lomon Smith Barney4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC Press Release
iki/CRS-RL31961issuance of fraudulent research reports and improper allocation of “hot initial2003-54
g/wpublic offerings of stock. Paid fines totaling $400 million.
s.or12/03/02 (S)Paid a $1.65 million fine to settle SEC and NASD charges relating to failure toSEC Press Release
leakretain e-mail records.2002-173
://wikick Grubman, managing director and4/28/03 (S)Charged by SEC, NASD, NYSE, and New York state with issuing fraudulent andSEC Press Release
httpearch analystmisleading research reports; agreed to pay $15 million fine.2003-55
-Plough Corp.9/9/03 (S)Charged by the SEC with violating the disclosure requirements of Regulation FDSEC 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.
chard J. Kogan, chairman of the board and9/9/03 (S)Agreed to cease and desist from causing any violation of Regulation FD in the futureSEC Press Release
Oand to pay $50,000 as a civil penalty.2003-109
rokerage, Inc.12/23/03 (F)Charged by the SEC for participating in a scheme to defraud mutual fundSEC Press Release
shareholders through improper late trading and market timing principally through2003-183
mutual funds managed by Alliance Capital Management and Massachusettsiel Calugar, president


Financial Services.

CRS-26
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
Trust Company, N.A.11/25/03 (F)Charged by the SEC with facilitating and participating in fraudulent mutual fund lateSEC Press Release
trading and market timing schemes by a group of related hedge funds.2003-164t D. Seeger, CEO
illiam A. Kenyon, president
ott, senior vice president
est Securities, Inc.2/12/04 (S)The NASD settled enforcement actions for failure to deliver mutual fund breakpointSEC Press Release
discounts (volume discounts) during 2001 and 2002. The firm agreed to compensate2004-17
customers for the overcharges and will pay a fine of $36,971.
rong Capital Management, Inc. (SCM)5/20/04 (S)Charged with allowing and, in the case of Strong, engaging in undisclosed frequentSEC Press Release
iki/CRS-RL31961trading in Strong mutual funds in violation of fiduciary duties to the Strong fundsand their investors. The settled order requires the payment of more than $1402004-69
g/wmillion in monetary remedies, and imposes regulated industry bars and other relief.chard S. Strong, founder and majority
s.orner
leakthony J. D’Amato, executive viceCharged with aiding and abetting SCM’s violations and is barred from association
://wikiidentwith any investment adviser, investment company, broker, or dealer.
httpomas A. Hooker, compliance officerCharged with aiding and abetting SCMs and Strong’s violations by failing, after he
learned of Strongs 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.
m Corp.
Dunlap, CEO9/03/02 (S)To settle SEC accounting fraud charges, the two agreed to pay fines totalingKnight Ridder
$700,000 and were barred from serving as officers or directors of public companies.Tribune News
Service, 9/03/02ll Kersh, CFO



CRS-27
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
bol Technologies, Inc.6/3/04 (S)The SEC charged Symbol Technologies with securities fraud and related violationsSEC Press Release
of the federal securities laws. Symbol agreed to settle the case without admitting or2004-74
denying the allegations and will pay a $37 million penalty for its conduct.
mo Razmilovic, president and CEO6/3/04 (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 thatnneth Jaeggi, senior management
Symbol had met or exceeded its financial projections.
ian Burke, senior management
ichael DeGennaro, senior management
ank Borghese, senior management
iki/CRS-RL31961ristopher DeSantis, executive
g/wmes Heuschneider, executive
s.orory Mortenson, executive
leak
mes Dean, executive
://wiki Donlon, executive
http
onard Goldner, general counselLeonard Goldner manipulated stock option exercise dates to enable certain senior
executives, including himself, to profit unfairly at the companys expense.
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 encourage2004-133
them to use TD Waterhouse for their clients’ brokerage business. In settling the Financial Services, Inc., independent
matter, TD Waterhouse agreed to pay a $2 million penalty, among other remedies.stment adviser
The commission also announced related fraud actions against the three investment
advisers and their principals for their failures to disclose the cash payments. Twodney Associates, Inc., independent
of the investment advisers, Kiely Financial Services and Rudney Associates, agreedstment adviser
to settle the charges without admitting or denying the findings.
dt, Delly & Simmons, LLC, independent
stment adviser
p Hotels & Casino Resorts1/16/02 (S)Agreed to cease and desist from making misleading statements in pro formaSEC Press Release
accounting releases.2002-6



CRS-28
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
co International
Dennis Kozlowski, CEO9/12/02 (F)SEC filed civil fraud charges seeking restitution of compensation and loans andSEC Press Release
money penalties. The SEC charged that the three treated Tyco as their private bank,2002-135
taking out hundreds of millions of dollars of loans and compensation without telling H. Swartz, CFO
investors.k A. Belnick, chief legal officer
ank E. Walsh, Jr., director12/17/02 (S)Charged with concealing a $20 million finder’s fee received from Tyco inSEC Press Release
connection with a 2001 merger. Walsh agreed to repay the $20 million to settle the2002-177
charge.
S Financial Services Inc.2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
iki/CRS-RL31961fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17
g/wagreed to compensate customers for the overcharges and will pay a fine of
s.or $4,621,768.
leak
S Warburg4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC Press Release
://wikiissuance of research reports not based on principles of fair dealing and good faith,2003-54
httpand for receiving undisclosed payments for research. Paid fines totaling $80 million.
roup, Inc (UCG)11/19/03 (F)The SEC filed a complaint that alleged that Adam Swickle conducted a fraudulentSEC Litigation
offering of United Currency Group, Inc.’s securities from May 2001 throughRelease No. 18471
December 2002 and raised approximately $774,000 from 21 investors.am Swickle, CEO
ancorp Piper Jaffray4/28/03 (S)Settled charges by New York state, NASD, NASAA, NYSE, and SEC relating toSEC 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
millio n.
12/03/02 (S)Paid a $1.65 million fine to settle SEC and NASD charges relating to failure toSEC Press Release
retain e-mail records.2002-173



CRS-29
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
S. Foodservice (subsidiary of Royal Ahold)
ael Resnick, CFO7/27/04 (F)The SEC alleges that Resnick, Kaiser, Lee, and Carter engaged in or substantiallySEC Press Release
participated in a scheme to overstate the income of Royal Ahold by $700 million or2004-100
more for at least FY2001 and FY2002. The complaint alleges that they grossly P. Kaiser, chief marketing officer
inflated reported profits and induced numerous suppliers to submit falsemothy J. Lee, executive vice president
confirmations to the companys auditors in order to conceal their fraud.
illiam Carter, vice president
n Wagoner Capital Management, Inc.8/26/04 (S)The SEC filed settled fraud charges against VWCM and Garrett Van WagonerSEC Press Release
)relating to their misstatement of the valuations of certain securities held by the Van2004-122
iki/CRS-RL31961Wagoner Funds. The settlement includes an $800,000 penalty from Van Wagoner
g/wand VWCM, a seven-year prohibition on Van Wagoners serving as an officer or
s.ordirector of a mutual fund, and a seven-year restriction on certain of Van Wagoner’s
leakactivities with the investment adviser (VWCM).
://wikirrett Van Wagoner, president
httpendi Universal, S.A.12/23/03 (S)Settled charges by the SEC that included false press releases, improper adjustmentsSEC Press Release
to earnings, and failure to disclose future financial commitments. Vivendi is2003-184
required to pay a civil money penalty in the amount of $50 million. Messier is-Marie Messier, CEO
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 $148,149illaume Hannezo, CFO
and pay a penalty of $120,000.
achovia Securities, LLC2/12/04 (S)The SEC and the NASD settled enforcement actions for failure to deliver mutualSEC Press Release
fund breakpoint discounts (volume discounts) during 2001 and 2002. The firm2004-17


agreed to compensate customers for the overcharges and will pay a fine of
$4,844,465.

CRS-30
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
ste Management Inc.
L. Buntrock, founder and CEO3/26/02 (F)The SEC charged the six with accounting fraud — a systematic scheme to falsifySEC Press Release
and misrepresent the companys financial results between 1992 and 1997. The SEC2002-44
seeks disgorgement of ill-gotten gains, money penalties, and bars the six fromillip B. Rooney, chief operating officer
serving as officers or directors of a public company.mes E. Koenig, CFO
omas C. Hau, controller
rbert Getz, general counsel
uce D. Tobecksen, vice president
iki/CRS-RL31961
g/west Coast Power12/19/02 (S)CFTC settled charges that West Coast and Dynegy manipulated the price of naturalCFTC Release
s.orgas by reporting false price and volume information. West Coast agreed to ceaseand desist from further violations and to pay a $5 million fine.4728-02
leak
://wikiorldCom (became MCI on 4/20/04)6/26/02 (F)5/19/03 (S)The SEC charged that WorldCom overstated its earnings between 1999 and 2002 asa result of improper accounting practices. WorldCom agreed to pay a fine of $500SEC LitigationRelease 18147
httpmillion, pending bankruptcy court approval.
vid F. Myers, controller9/26/02 (F)Barred from serving as an officer or director of a public company; monetary
penalties pending.
ford Yates, Jr., director of accounting10/02/02 (F)Barred from serving as an officer or director of a public company; suspended from
practicing accounting before the SEC; monetary penalties pending.
tty Vinson, accountant10/10/02 (F)Suspended from practicing accounting before the SEC; monetary penalties pending.
oy M. Normand, accountant10/10/02 (F)Suspended from practicing before the SEC; monetary penalties pending.
tt D. Sullivan, CFO3/2/04 (F)Charged with engaging in a fraudulent scheme to conceal WorldComs poorSEC Press Release
financial performance.2004-25



CRS-31
Date Civil
Company/Individual/EventAction Filed (F)ChargesSource
or
Settled (S)
4/11/02 (S)Agreed to pay a $10 million fine to settle SEC charges that it used fraudulentSEC Press Release
accounting to overstate its earnings between 1997 and 2000.2002-52
ul A. Allaire, CEO6/5/03 (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 fraud2003-70ichard Thoman, president
and aiding and abetting Xeroxs violations of the reporting, books and records, and
internal control provisions of the federal securities laws.rry D. Romeril, CFO
ilip D. Fishbach, controller
iel S. Marchibroda, asst. controller
ory B. Tayler, controller
iki/CRS-RL31961
g/w 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]
s.or FERC at [http://www.ferc.gov/press-room/press-releases.asp].
leak
: NASD (National Association of Securities Dealers), NYSE (New York Stock Exchange), and NASAA (North American Securities Administrators Association)
://wiki
http resulted in criminal indictments, some followed by guilty pleas.