In other SEC news, TradingMarkets reports that the regulator has brought an enforcement action against California-based Meridian Holdings, Inc. The company and two individuals are charged with backdating Sarbanes-Oxley certifications and improperly using a sizable default judgment to increase company earnings.
The story indicates that the company, its former CEO and its former finance chief allegedly improperly recognized the $30 million judgment and interest accrued thereon as income when they had "no reasonable basis for believing" they would collect the amounts recognized. As a result, the company reported gains in a quarter in which it actually realized losses.
The SEC's complaint also charges the former CEO and finance chief with wrongdoing concerning regulatory filings. From TradingMarkets:
The complaint further alleges that when Dike filed Meridian's second and third quarter reports, he included Nguyen's name on the Sarbanes-Oxley Act certifications filed with the reports even though he knew Nguyen had not signed them. While Nguyen signed the certifications included with Meridian's second quarter report after it had been filed, she never signed the certifications included with Meridian's third quarter report. Meridian also provided the Commission staff with backdated certifications filed with its 2004 annual report.
The SEC is seeking permanent injunctive relief, civil penalties, and orders banning the individual defendants from serving as officers in a public company.