Wednesday, February 21, 2007
The SEC settled fraud charges against Richard L. Stern, the former CFO of Bennett Environmental, Inc. (BEI), and two others for their roles in the repeated dissemination of false and misleading information concerning a Superfund soil remediation contract awarded to the company in 2003. The Commission alleged that between June 2003 and April 2004, Stern and others caused BEI to issue press releases and make public filings misrepresenting and exaggerating a contract that it extolled as "the largest in the Company's history" with a value of "$200 million [Canadian]." In reality, the contract had a guaranteed value of less than $250,000, later was cancelled by the Army Corps of Engineers, reinstated on a limited basis, and then re-solicited under materially different terms. The complaint alleges that during the relevant time period, Stern and the other defendants failed to inform the public about material changes to the contract, failed to correct prior false statements, and continued to misrepresent the contract by asserting that it was in full force and effect and worth C$200 million. Only after a new CEO took over at BEI did the true facts come to light, which were disclosed in a July 2004 press release.
Without admitting or denying the Commission's allegations , Stern consented to the entry of a final judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5 and 13a-14 thereunder, and aiding and abetting violations of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-16 thereunder. Stern also agreed to pay a $75,000 civil penalty and to be barred from acting as an officer or director of a public company for five years. [SEC v. Bennett Environmental, Inc., John A. Bennett, Robert P.G. Griffiths, and Richard L. Stern, Case No. 06-Civ-14294] (LR-20009)