Tuesday, September 30, 2008
The SEC charged the supermarket operator and wholesale food distributor The Penn Traffic Company with fraud for orchestrating multi-million dollar accounting schemes that inflated its operating income and overstated its after tax net income. The SEC's complaint, filed in the U.S. District Court for the Northern District of New York, alleges that Syracuse, N.Y.-based Penn Traffic carried out the accounting fraud over multiple reporting periods, and failed to file certain required financial reports with the SEC or filed reports that did not fully comply with SEC regulations. Penn Traffic agreed to settle the SEC's charges without admitting or denying the allegations in the Complaint and consented to the entry of a Court order enjoining it from violating the antifraud, books and records, internal controls, and periodic reporting provisions of the federal securities laws. Penn Traffic also agreed to certain undertakings that require it to employ an independent examiner, among other things. The settlement is subject to the Court's approval.
The SEC previously charged two former senior Penn Traffic executives and one Penny Curtiss executive for their roles in the fraudulent schemes alleged in the complaint. The Commission's case is pending against Leslie H. Knox, Penn Traffic's former Senior Vice President and Chief Marketing Officer, and Linda J. Jones, Penn Traffic's former Vice President of Non-Perishable Merchandising. In 2005, the Commission obtained a consent judgment against Michael J. Lawler, the former Director of Manufacturing at Penny Curtiss, permanently enjoining him from violating the antifraud and books and records of the securities laws.