Thursday, June 29, 2006
The SEC filed a settled civil injunctive action against Raytheon Co., its former CEO Daniel Burnham, and a financial officer at one of its subsidiaries, Aldo Servello, for making misleading disclosures about financial problems in the company's commercial aircraft subsidiary. According to the Litigation Release (here):
The SEC charged that, in periodic reports filed with the Commission from 1997 to 2001, Raytheon made false and misleading disclosures and used improper accounting practices that operated as a fraud by failing to adequately and accurately disclose the declining financial results and deteriorating business of Raytheon's commercial aircraft manufacturing subsidiary, RAC. The SEC also charged that certain of these disclosures and accounting practices were undertaken with the knowledge of Burnham in 2000 and 2001 and Servello in 2000. Without admitting or denying the SEC's findings, Raytheon, Burnham, and Servello agreed to settle these charges by consenting to the entry of a Cease-and-Desist Order by the Commission.
Raytheon agreed to pay a $12 million civil penalty, while Burnham and Servello will disgorge salary and bonuses along with paying a civil penalty totaling $1,238,344 and $34,628, respectively. (ph)