Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, February 21, 2007

former Bennett Environmental CFO Settles Charges

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)

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