Securities Law Prof Blog

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

Tuesday, September 30, 2008

Former BISYS Group Officer Settles SEC Accounting Charges

The SEC filed a civil injunctive action in United States District Court for the Southern District of New York charging Steven Wevodau, former vice president of finance for the Insurance and Education Services group of the BISYS Group, Inc., with violating the antifraud and internal controls provisions of the Securities Exchange Act of 1934 ("Exchange Act'), and with aiding and abetting BISYS's violations of the Exchange Act's financial reporting, books-and-records and internal controls provisions. Wevodau has agreed to settle the case, without admitting or denying the Commission's allegations.  The SEC's complaint alleged that from at least July 2000 until at least March 2002, Wevodau was the senior financial official in the business unit that included BISYS's Insurance Services division, which was largely responsible for the company's reported growth during the period. Wevodau allegedly responded to senior management's focus on meeting aggressive, short-term earnings projections by encouraging and directing personnel in Insurance Services' finance department to meet earnings targets by applying a variety of fraudulent or otherwise improper accounting practices. These accounting practices allegedly substantially inflated BISYS's operating results for the quarters ended September 30, 2000 and December 31, 2000, and for the fiscal years ended June 30, 2001 and 2002 (fiscal years 2001 and 2002) and contributed substantially to the company's eventual restatement of over $100 million of Insurance Services' reported income for fiscal years 2001 through 2003.

BISYS previously consented, without admitting or denying the Commission's allegations against it, to the entry of a judgment enjoining the company from violating the financial reporting, books-and-records, and internal controls provisions of the federal securities laws and ordering that it pay $25 million in disgorgement and prejudgment interest.

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