Jan 30 (Reuters) – Symmetry Medical Inc and several former executives and accountants have settled U.S. Securities and Exchange Commission charges over a ‘pervasive’ alleged accounting fraud at a British unit that distorted the medical device company’s results.
The settlement also marks one of the few times the SEC has invoked the Sarbanes-Oxley governance law of 2002 to claw back sums paid to senior corporate executives while a fraud was going on but who did not know it was occurring.
Former Chief Executive Brian Moore agreed to reimburse $450,000 to Symmetry, while Chief Financial Officer Fred Hite agreed to reimburse $185,000. Hite also agreed to pay a $25,000 civil penalty.
Symmetry also agreed not to violate rules related to financial reporting, books and records and internal controls.
The SEC accused Symmetry’s Thornton Precision Components unit of having systematically overstated assets and revenue and understated costs, starting before the parent’s December 2004 initial public offering and ending in late September 2007.
It said Symmetry was ultimately forced to restate results, reducing reported income from 2004 through the first two quarters of 2007 by more than two-thirds to about $23 million from about $76 million.
The four other former Symmetry executives settled related SEC charges, and two former Ernst & Young LLP UK auditors accused of failing to properly audit Thornton agreed to two-year suspensions from appearing before the SEC.
‘Symmetry shareholders were investing their money, and Symmetry and TPC executives were collecting their bonuses, based in part on inflated numbers,’ Stephen Cohen, associate director of the SEC enforcement unit, said in a statement.
Thomas Sullivan, who succeeded Moore as chief executive last January, in an interview said the company reported the irregularities to the SEC in 2007 immediately after discovering them, and is pleased to settle. He also said he looked forward to ‘many years’ working with CFO Hite.
Russ Ryan, a lawyer for Moore, in a statement said Sarbanes-Oxley ‘automatically requires reimbursement of certain amounts even when the CEO is innocent of wrongdoing, and that is what Mr. Moore agreed to do here. He is glad to have put the matter behind him.’
Symmetry is based in Warsaw, Indiana. Its products include orthopedic implants, surgical instruments and engine parts used in aerospace. Thornton is based in Sheffield, England.
Executives affiliated with home builder Beazer Homes USA Inc , auto parts retailer CSK Auto Inc and automated teller machine manufacturer Diebold Inc have also agreed to clawbacks in other SEC cases that invoked Sarbanes-Oxley.
(Reporting By Jonathan Stempel in New York and Sarah N. Lynch in Washington, D.C.; Editing by Phil Berlowitz) Keywords: SYMMETRY/SEC
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