Monday, April 5, 2010
The SEC settled its enforcement action against Michael DeGennaro (DeGennaro), former Senior Vice President of Finance at Symbol Technologies, Inc. (Symbol) that alleged that Symbol and eleven former Symbol executives, including DeGennaro, committed and/or aided and abetted violations of various provisions of the Securities Exchange Act of 1934 (Exchange Act) in connection with Symbol's financial reporting from 1999 through 2002.
As part of the settlement, DeGennaro will (subject to court approval) pay a civil monetary penalty of $40,000. In addition, the Commission issued an administrative cease-and-desist order. DeGennaro consented to the penalty and the Order without admitting or denying the findings..
According to the SEC, Symbol, a public company during the relevant period that was later acquired by Motorola, Inc., recorded non-recurring charges in connection with, inter alia, Symbol's: (i) acquisition of Telxon Corporation, which resulted in a $185.9 million restructuring charge recorded in the fourth quarter of 2000; and (ii) relocation of manufacturing operations to new facilities, which resulted in a $59.7 million restructuring charge recorded in the third quarter of 2001 (the Charges). The Charges and certain associated reserves were not recorded in accordance with generally accepted accounting principles (GAAP) because, among other things, they misclassified certain expenses, included amounts unrelated to the purpose of the Charge and, in some cases, were used in later periods for unrelated purposes. As a result, Symbol violated the financial recordkeeping and internal control provisions embodied in Sections 13(b)(2)(A) and (B) of the Exchange Act.
DeGennaro, together with others, determined how the Charges were recorded and accounted for on Symbol's internal books and records and in its financial statements. DeGennaro failed to take requisite steps to ensure that Symbol's internal books and records and financial statements accurately reflected each element of the Charges and the uses of associated reserves, and that the Charges and the uses of associated reserves were accounted for in accordance with GAAP. As a result, DeGennaro was a cause of Symbol's violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.