In the wake of filing what is the
most significant enforcement action brought in years against Goldman Sachs
& Co., discussed here, the Commission obtained what can only be called a
face saving settlement in its action against former OMB director David Stockman
arising out of his tenure at Collins & Aikman. SEC v. Collins &
Aikman, Civil action No. 07-CV-2419 (S.D.N.Y. Filed March 27, 2007).
The initial complaint in this case,
discussed here, alleged that Mr. Stockman, the former CEO and Chairman of the
company, and other senior company officials and board members, engaged in
multiple fraudulent schemes and made materially false and misleading statement
about the financial condition of the company and its operating results. These
actions were alleged to have violated Securities Act Section 17(a) and Exchange
Act Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) and the pertinent rules
thereunder. At the same time a parallel criminal action was brought by the U.S.
Attorney's Office for the Southern District of New York. That action was
subsequently dismissed after Mr. Stockman and his team made an extended
presentation to the USAO regarding the accounting issues in the case as
discussed here. The SEC however persisted with its action.
The settlement with Mr. Stockman and
others drops the most significant charges in the Commission's complaint while
dismissing all charges against several defendants. In the settlement:
The Commission also agreed to
dismiss all charges against four defendants: John Galante, the former
Treasurer; Christopher Williams the former Vice President of Business
Development; Gerald Jones, the former COO; and Thomas Gougherty, the former
controller of a company division. See also Litig. Rel.
No. 20055 (Mar. 26, 2007).
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