Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Friday, July 23, 2010

Sunrise Senior Living Settles Accountin Fraud Charges with SEC

The SEC settled charges against Sunrise Senior Living, Inc., a Virginia-based owner and manager of assisted living facilities whose stock is listed on the New York Stock Exchange, and former Sunrise officers, Larry E. Hulse and Kenneth J. Abod. The Commission's complaint alleged that Sunrise engaged in financial reporting fraud from 2003 through 2005, by making improper adjustments to its reserve for self-insured health and dental benefits and its accrual for corporate bonuses to meet public earnings forecasts. The complaint further alleged that Hulse, Sunrise's Chief Financial Officer during most of the relevant period, oversaw improper adjustments to the health and dental reserve and signed false SEC filings and Sarbanes-Oxley certifications. In addition, the complaint alleges that Hulse and Abod, Sunrise's former Treasurer during most of the relevant period, directed Sunrise employees to make improper adjustments to the bonus accrual account. Hulse and Abod are both certified public accountants.

Without admitting or denying the allegations in the complaint, Sunrise and Hulse each agreed to injunctions against federal securities laws.  Hulse also agreed to pay $164,993, comprised of $50,000 in civil penalties, disgorgement of $83,333, and prejudgment interest of $31,660.  Abod has agreed, without admitting or denying the allegations in the complaint, to pay a civil penalty of $25,000. The proposed settlements in the civil action are subject to Court approval.

The terms of the proposed settlement with Sunrise reflect credit given to Sunrise for its substantial assistance in the investigation.

http://lawprofessors.typepad.com/securities/2010/07/sunrise-senior-living-settles-accountin-fraud-charges-with-sec.html

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