Thursday, June 21, 2007
On June 20, the SEC settled enforcement proceedings against Cambrex Corporation (Cambrex) for violations of the recordkeeping and internal controls provisions of Section 13 of the Securities Exchange Act of 1934 (Exchange Act). Cambrex is a life sciences company whose common stock trades on the New York Stock Exchange. From at least 1997 through 2001, Cambrex failed to properly reconcile its intercompany accounts, thereby accruing an imbalance of approximately $17.1 million. Of that amount, approximately $3.5 million was erroneously reflected as income when in fact it should have been accounted for as an operating expense, and Cambrex could not ascertain whether another $2.6 million was also improperly booked as income. As a result, Cambrex issued erroneous periodic and annual reports, and, in January 2003, Cambrex restated its financial results for the five-year period, reducing net income after taxes by approximately $5 million. The complaint alleges that the officers were aware of the problem but failed to reconcile its intercompany accounts until its executives were faced with the new executive officer certification requirements under the Sarbanes-Oxley Act of 2002.