Wednesday, May 27, 2009
On May 27, the SEC issued an Order under Rule 102(e) of the Commission's Rules of Practice against John T. McDonald, who was Vice President and Treasurer of Kmart Corporation prior to the company's bankruptcy, suspending him from appearing or practicing before the Commission as an accountant with a right to apply for reinstatement after three years. This action resulted from a May 1, 2009 final judgment entered against McDonald, permanently enjoining him from future violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and aiding and abetting violations of Sections 13(a) and Rules 12b-20 and 13a-13 thereunder, in the civil action entitled Securities and Exchange Commission v. Charles C. Conaway and John T. McDonald, Case No. 2:05-CV-40263 in the United States District Court for the Eastern District of Michigan. McDonald was ordered to pay a $120,000 civil penalty and barred from serving as an officer or director of a publicly traded company for five years. The Commission's complaint alleged, among other things, that McDonald was responsible for materially false and misleading disclosure about the financial condition of Kmart in the Management's Discussion and Analysis section of the company's Form 10-Q and in a conference call with analysts and investors.
McDonald consented to the issuance of the Order without admitting or denying any of the findings in the Order.