Securities Law Prof Blog

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

Thursday, December 13, 2007

Former United Rentals CFO Settles Fraud Charges

The  SEC  announced  that  it  filed  settled  securities fraud charges  against Michael J. Nolan, a former Chief Financial Officer of United Rentals, Inc. (URI). The SEC alleged that, from 2000 through 2002, Nolan engaged  in a series of fraudulent transactions undertaken in order to meet  URI's earnings forecasts and analyst expectations. The complaint alleges  that  Nolan and others carried out the fraud through a series of  interlocking  three-party transactions, structured as "minor sale-leasebacks,"  to  allow  URI  to  recognize revenue prematurely and to inflate  profits  generated  from the sales. As a result of the fraud, URI  materially overstated its financial results in its Forms 10-K for fiscal  years  2000 and 2001, and its Forms 10-Q for the periods ended June  30,  2001,  and  March  31,  2002,  as  well  as in other public releases.

The  complaint  further  alleges that shortly after URI announced 2001 and 2002 year-end results, Nolan sold approximately $11 million of URI stock  that  he  owned, knowing that the company's announced financial results were materially overstated.

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