Thursday, December 13, 2007
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.