The Securities and Exchange Commission announced Wednesday that BISYS is paying $25 million in disgorgement and interest to settle charges of violating financial reporting, books and records and internal control provisions of the Securities Exchange Act of 1934.
The SEC’s complaint, which it filed Wednesday in federal court in Manhattan, alleges that between July 2000 and December 2003, former BISYS officers and employees overstated the company’s financial results for the fiscal years ended June 30, 2001, 2002 and 2003 by roughly $180 million, primarily for its insurance services division. The SEC said the executives set aggressive, short-term earnings targets, which the accounting division attempted to meet through improper accounting practices that the executives failed to detect. Among other things, the SEC said, BISYS acquired a number of insurance firms during the years in question but lacked adequate controls for reconciling their account balances or tracking their receivables.
“This is a case study in internal control failures under earnings pressure,” said Mark K. Schonfeld, director of the New York Regional Office. “The settlement delivers meaningful relief to investors harmed by BISYS’s misconduct.
Andrew M. Calamari, associate director of the SEC’s New York regional office, added: “The Commission continues to focus on accounting improprieties such as these at public companies, and the resulting harm to investors. We aim to deter such conduct before it occurs, and if it does, to compensate investors and prevent recidivism.”
BISYS agreed to settle the case without admitting or denying the charges.