Outline of Recent SEC Enforcement Actions - the Utah State Bar

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Sarbanes-Oxley Act of approximately $448 million in cash bonuses, profits from the exercise and sale of UnitedHealth stock and unexercised UnitedHealth options. McGuire also agreed to be barred from serving as an officer or director of a public company for ten years. Litigation Release No. 20387 (Dec. 6, 2007). SEC v. Blue Coat Systems, Inc. and Robert P. Verheecke Lit. Rel. No. 20801 (Nov. 12, 2008) http://www.sec.gov/litigation/litreleases/2008/lr20801.htm Press Rel. No. 2008-266 (Nov. 12, 2008) http://www.sec.gov/news/press/2008/2008-266.htm The SEC charged Sunnyvale, California, network security company Blue Coat Systems, Inc. and its former chief financial officer Robert P. Verheecke, alleging that they backdated stock option grants to executives and employees and reported false financial information to shareholders. The SEC's complaint alleges that from approximately 2000 through 2005, Blue Coat concealed nearly $50 million in compensation expenses associated with valuable "in-the-money" options by backdating paperwork to make it appear as if the options had been granted on earlier dates. Blue Coat and Verheecke have agreed to settle the SEC's charges without admitting or denying the allegations. Verheecke will pay more than $185,000 in disgorgement, penalties, and prejudgment interest. Without admitting or denying the SEC's allegations, Verheecke consented to a permanent injunction against violations of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(b)(5), and 14(a) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13a-14, 13b2-1, 13b2-2, and 14a-9 thereunder. Verheecke also consented to disgorgement and prejudgment interest of $35,946, a financial penalty of $150,000, and five-year bars from serving as an officer or director of a public company and appearing or practicing as an accountant before the SEC. Blue Coat consented to be enjoined from violating Section 17(a) of the Securities Act, Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act, and Rules 10b-5, 12b 20, 13a-1, 13a-11, 13a-13, and 14a-9. The Commission took into account the cooperation that Blue Coat provided Commission staff during its investigation. SEC v. Sycamore Networks, Inc., Frances M. Jewels, Cheryl E. Kalinen, and Robin A. Friedman Lit. Rel. No. 20638 (Jul. 9, 2008) http://www.sec.gov/litigation/litreleases/2008/lr20638.htm Press Rel. No. 2008-136 (Jul. 9, 2008) http://www.sec.gov/news/press/2008/2008-136.htm The SEC filed a settled civil enforcement action against Sycamore Networks, Inc., an optical networking company based in Chelmsford, Massachusetts, as well as its former Chief Financial Officer Frances M. Jewels, former Director of Financial Operations Cheryl E. Kalinen, 30
and former Director of Human Resources Robin A. Friedman in connection with the backdating of stock options to employees over several years and the failure to disclose options-related expenses to the company's auditors and investors. The Commission's complaint, filed in federal district court in Massachusetts, alleges that Sycamore's unreported options-related expenses during its fiscal years 2000 through 2005 totaled nearly $250 million. The Commission's complaint further alleges that Jewels and Kalinen repeatedly backdated options grants between October 1999 and July 2002 to prices at or near monthly or quarterly low points for the company's stock, providing employees with options with prices at which they could purchase shares that were lower than the market price at the time the options actually were granted. The Commission also alleges that Jewels and Kalinen falsified grant approval documentation and that they personally benefited from grants of below-market options. The Commission's complaint describes an internal memorandum that outlines a plan to grant options at below-market prices to five company employees and keep the company's outside auditors from discovering these grants. The memo, drafted by Kalinen and provided to Jewels and Friedman, analyzed the risk that the company's outside auditors would uncover the conduct. Friedman participated in the plan by altering or creating, or causing others to alter or create, company personnel and payroll records so that they would reflect inaccurate start dates for the employees, according to the Commission's complaint. All defendants have agreed to settle this matter, without admitting or denying the allegations in the Commission's complaint, on the following terms: Jewels has consented to the entry of a permanent injunction prohibiting her from violating Section 17(a) of the Securities Act of 1933 (Securities Act) and Sections 10(b), 13(b)(5), 14(a), and 16(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 10b-5, 13a-14, 13b2-1, 13b2-2, 14a-9, and 16a-3 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b- 20, 13a-1, 13a-11, and 13a-13 thereunder. Jewels will disgorge ill-gotten gains of $30,000 (plus prejudgment interest on that amount of $4,980.04), reimburse Sycamore (pursuant to Section 304 of the Sarbanes-Oxley Act of 2002) for $190,000 in cash bonuses she received during the period of the fraud, and pay a civil monetary penalty of $230,000. Jewels also will be barred from serving as an officer or director of any public company for a period of five years, and, in a related administrative proceeding, will be prohibited from appearing or practicing before the Commission as an attorney or accountant for a period of five years. Kalinen has consented to the entry of a permanent injunction prohibiting her from violating Sections 10(b), 13(b)(5), and 14(a) of the Exchange Act and Rules 10b-5, 13b2-1, 13b2-2, and 14a-9 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. Kalinen also will disgorge ill-gotten gains of $28,000 (plus prejudgment interest on that amount of $7,060.71) and pay a penalty of $150,000. 31
Page 1 and 2: Outline of Recent SEC Enforcement A
Page 3 and 4: OTHER CASES .......................
Page 5 and 6: SEC v. Marc S. Dreier .............
Page 7 and 8: severe concerns about the increasin
Page 9 and 10: The complaint alleges: • Strauss
Page 11 and 12: According to the SEC's orders, Zuri
Page 13 and 14: The SEC alleges that Cassidy and O'
Page 15 and 16: Watson, engaged in a fraudulent sch
Page 17 and 18: judgment that permanently enjoins h
Page 19 and 20: officer or director of a public com
Page 21 and 22: CASES INVOLVING STOCK OPTION BACKDA
Page 23 and 24: made materially false and misleadin
Page 25 and 26: the antifraud, reporting, record-ke
Page 27 and 28: Specifically, the SEC's complaint a
Page 29: its extensive remedial measures. Un
Page 33 and 34: thereunder. In addition, the SEC al
Page 35 and 36: The complaint alleges that all of t
Page 37 and 38: OIL FOR FOOD CASES CASES INVOLVING
Page 39 and 40: held for one year and the unusually
Page 41 and 42: Bangladesh; telecommunications proj
Page 43 and 44: In a related action, the Commission
Page 45 and 46: participated in a scheme to bribe N
Page 47 and 48: The settlements will restore approx
Page 49 and 50: and that the defendants acted as un
Page 51 and 52: the firms to cease-and-desist from
Page 53 and 54: 2008, Wachovia offered to purchase
Page 55 and 56: eligible customers incurred consequ
Page 57 and 58: deceptive or fraudulent devices or
Page 59 and 60: Securities Act of 1933 and Section
Page 61 and 62: Admin. Proc. File No. 3-12751 (Sept
Page 63 and 64: CASES INVOLVING SELF-REGULATORY ORG
Page 65 and 66: The defendants are Michael T. Uberu
Page 67 and 68: Specifically, the SEC alleges that
Page 69 and 70: The SEC's charges against Harding r
Page 71 and 72: have withdrawn approximately $8.4 m
Page 73 and 74: Press Release (January 21, 2009) ht
Page 75 and 76: CASES INVOLVING MUTUAL FUNDS AND IN
Page 77 and 78: securities, became illiquid on that
Page 79 and 80: http://sec.gov/litigation/admin/200
Page 81 and 82:
The SEC alleges that Pax World purc
Page 83 and 84:
BACAP aided and abetted and caused
Page 85 and 86:
The complaint alleges that the defe
Page 87 and 88:
disgorgement of illegal profits, ci
Page 89 and 90:
InVision Technologies, Inc.; Eon La
Page 91 and 92:
firm. The SEC alleges Murdoch used
Page 93 and 94:
SEC v. Pawel P. Dynkowski, Matthew
Page 95 and 96:
shares of Mobile Ready Entertainmen
Page 97 and 98:
The Securities and Exchange Commiss
Page 99 and 100:
The complaint alleges violations of
Page 101 and 102:
CASES INVOLVING SECURITIES OFFERING
Page 103 and 104:
y causing the release of spam email
Page 105 and 106:
The SEC filed an emergency action t
Page 107 and 108:
Restructuring Officer Hamstreet & A
Page 109 and 110:
investigation. King went so far as
Page 111 and 112:
limited trading that he did, withdr
Page 113 and 114:
separate transactions) and forwarde
Page 115 and 116:
The SEC alleges that Weitzman eithe
Page 117:
misrepresentations including promis
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Outline of Recent SEC Enforcement Actions - the Utah State Bar

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