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Ex-Execs at Xerox to Settle SEC Charges

June 06, 2003|From Reuters

Six former executives of Xerox Corp., including two former chief executives, agreed to pay $22 million to settle charges that they manipulated earnings to boost the company's share price, federal regulators said Thursday.

In a civil suit filed in New York, the Securities and Exchange Commission accused the six of participating in a scheme from 1997 to 2000 that misled investors about Xerox's earnings. Their goal, the SEC said, was to polish the company's reputation on Wall Street and boost its stock price.

The steepest penalties will be paid by two former CEOs, Paul Allaire and Richard Thoman, who will pay $8.6 million and $6.9 million, respectively, and former Chief Financial Officer Barry Romeril, who will pay $5.2 million.

Xerox last year paid $10 million to the SEC to settle charges that it had manipulated its financial results. Under the settlement, Xerox also restated its results for 1997 through 2000 and adjusted its 2001 results. The company did not admit or deny guilt.

Under the settlement, Allaire also agreed to a five-year ban from serving as an officer or a director of a public company.

Lucent Technologies Inc. said Allaire would step down from its board of directors as a result. Allaire, who has been a Lucent director since the telecommunications equipment maker was spun off from AT&T Corp. in 1996, was chairman of Lucent's audit and finance committee.

Romeril has been permanently banned as an officer or director of a public company.

The other former executives were Philip Fishbach, controller; Daniel Marchibroda, assistant controller; and Gregory Tayler, controller.

The $22 million to be paid by the defendants, none of whom admitted or denied the charges, will be put in a victims fund.

Xerox shares rose 2 cents to $11.45 on the New York Stock Exchange.

Attorneys representing Allaire and Romeril said the retired pair "have decided to put this issue behind them and get on with their lives rather than undertake lengthy and expensive litigation of the issues."

Attorneys for the others couldn't be reached.

The SEC suit against the six former executives accused them of inflating revenue using accounting devices that were not disclosed to investors and many of which violated generally accepted accounting principles.

"Manipulation of revenue and earnings through accounting devices has no place in the executive suite," SEC lawyer Paul Berger said.

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