CSC agrees to $190M fine to settle SEC fraud charges
- By Mark Hoover
- Jun 05, 2015
Computer Sciences Corp. is dishing out $190 million to settle charges that the company and former executives manipulated financial results and concealed problems about the company’s largest contract.
The Securities and Exchange Commission also charged former CSC finance executives involved in the company’s international businesses for ignoring basic accounting standards to increase reported profits, the SEC said in a release.
Five of the eight executives charged have agreed to settlements. Among them are former CEO Michael Laphen, who agreed to return to the company more than $3.7 million in compensation and pay a $750,000 fine, and former CFO Michael Mancuso, who agreed to return $369,100 in compensation and pay a $175,000 fine.
Robert Sutcliffe, Edward Parker, and Chris Edwards are contesting the charges against them.
SEC said that the fraud began after CSC learned that it would lose money on a multi-billion dollar contract with the U.K. National Health Service because the company was unable to meet deadlines. Sutcliffe then allegedly added items to the company’s accounting models that artificially increased its profits, the SEC said.
The company thereby artificially avoided recording significant reductions in its earnings in 2010 and 2011, the company said.
“We are pleased to settle this long-standing civil investigation that focused largely on accounting issues from 2009 to 2012,” CSC said in a statement to Washington Technology.
“The company installed new leadership in 2012, made adjustments to prior period financial statements in our SEC filings, and since the beginning of 2011 has instituted comprehensive enhancements to our compliance, financial control and disclosure programs,” a CSC spokesperson said.
“As part of the settlement agreement, CSC neither admits nor denies the SEC’s allegations,” the spokesperson said.
Mark Hoover is a senior staff writer with Washington Technology. You can contact him at email@example.com, or connect with him on Twitter at @mhooverWT.