Pages 1-2 reflect the status and my assessment of true Section 304 standing for the cases Morgenson specifically mentioned by name in her piece. As you can see, three of them do not meet the criteria. The facts of these cases and the disposition were verified with my sources, including the New Century Case where I spoke with Michael Missal the bankruptcy examiner. One case is still pending. Given the frequency with which Section 304 allegations were dropped in other cases, I would not count any as 304 enforcement in until they are fully settled or adjudicated.
Case Name | Lit Release No. | Date | Underlying Charges | Status | True 304? |
SEC v. William W. McGuire, M.D. | 20387 | 12/6/07 | Civil fraud against former CEO and chairman of board backdated stock options | Settled, SEC cites it as first case | Yes |
SEC v. Stuart W. Fuhlendorf | 21210 | 9/14/09 | Civil fraud against former CFO of Isilon Systems, Inc. Improperbooking of revenue | Pending | No. There was a restatement but 304 never cited in the complaint. |
SEC v. Spongetech Delivery Systems, Inc. | 21515 | 5/5/10 | Civil fraud against company, CEO and CFO (“pump and dump scheme” – unregistered sale of publicly- traded Spongetech stock); criminal charges as well | Pending | No. There was a re-audit but no restatement, a req condition. |
SEC v. Brad A. Morrice et al. | 21327 21609 | 12/7/09 7/30/10 | Civil fraud against New Century Financial Corp and against former CEO Morrice, former CFO and former controller for fraudulent accounting | Settled. | No. Bankruptcy. No restatement, a necessary condition. |
SEC v. Navistar et al. | 21616 | 8/5/10 | Civil fraud against Navistar, former CEO, former CFO, other accounting personnel for financial fraud, reporting and internal controls violations | Settled. Admin proceeding. | Yes. |
SEC v. O’Dell | 21543 | 6/2/10 | Independent Section 304 action against former CEO of Diebold, Inc. (Civil fraud charges against Diebold and two former CFOs and accounting personnel) | Settled. | Yes. Restatement 9/08. |
SEC v. Gregory Geswein et al. | 21543 | 6/2/10 | Civil fraud charges against former CFOs of Diebold (and against Diebold) for fraudulent accounting practices to inflate Diebold’s earnings | Pending. | TBD. |
SEC v. Nutracea, et al. | 21819 | 1/20/11 | Civil fraud against three former executives and two former accounting personnel for fraudulent accounting scheme | Settled. | Yes. Restatement 10/09. |