Wednesday, March 3, 2010
The SEC filed a civil action against Verint Systems Inc. ("Verint") alleging a fraudulent scheme involving improper accounting practices. The Complaint alleges the misconduct began as early as 1998, when Verint was a wholly-owned subsidiary of Comverse Technology, Inc. ("Comverse"), and continued after Verint became a publicly traded company, while still majority-owned by Comverse, in 2002. In addition, the Commission today instituted administrative proceedings against Verint to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months for its failure to file required periodic reports for over four years.
The Complaint alleges that as a result of this misconduct, Verint's books and records falsely and inaccurately reflected, among other things, the Company's liabilities, expenses, net income, and general financial condition through at least the fiscal year ended January 31, 2005. The Complaint also alleges that Verint failed to maintain a system of internal accounting controls sufficient to provide assurances that its reserve activity was recorded as necessary to permit the proper preparation of financial statements in conformity with GAAP.
Without admitting or denying the allegations of the Commission's Complaint, Verint has consented to the entry of a final judgment permanently enjoining it from violating the antifraud, reporting, record-keeping, and internal controls provisions of the federal securities laws. Specifically, the proposed final judgment against Verint would permanently enjoin it from violating Section 17(a) of the Securities Act of 1933, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 13a-1 and 13a-13. In accepting the settlement offer, the Commission considered, among other things, Verint's remediation and cooperation in the Commission's investigation. The settlement is subject to the approval of the United States District Court for the Eastern District of New York.
Separately, the Commission today issued an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 against Verint, to determine whether the registration of each class of its securities should be revoked or suspended for a period not exceeding twelve months based on its failure to file required periodic reports. The Division of Enforcement alleges that Verint has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder by failing to file an annual report on either Form 10-K or Form 10-KSB since April 25, 2005, or quarterly reports on either Form 10-Q or Form 10-QSB since December 12, 2005. A hearing will be scheduled before an Administrative Law Judge to determine whether the allegations of the Division contained in the Order are true, and to provide Verint an opportunity to respond to these allegations.