U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19086 / February 17, 2005
Accounting and Auditing Enforcement
Release No. 2190 / February 17, 2005
SEC v. Symbol Technologies, Inc., et al., 04 CV 2276 (LDW)(EDNY)
FORMER CHIEF ACCOUNTING OFFICER AND SENIOR VICE PRESIDENT OF WORLDWIDE OPERATIONS OF SYMBOL TECHNOLOGIES, INC. CONSENTS TO PERMANENT INJUNCTIVE RELIEF AND OFFICER-AND-DIRECTOR BAR
On February 17, 2005, Brian Burke ("Burke"), a former Chief Accounting Officer and Senior Vice President of Worldwide Operations at Symbol Technologies, Inc. ("Symbol"), consented to entry of an order that, if approved by the Court, will prohibit him from acting as an officer or director of a public company and impose permanent injunctive relief for violations of the relevant antifraud, corporate reporting, books and records and internal control provisions of the federal securities laws. Specifically, Burke has agreed, without admitting or denying the allegations in the Commission's complaint, to a permanent injunction against violations, or conduct giving rise to violations, of Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2), 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 10b-5, 13b2-1 and 13b2-2, 12b-20, 13a-1 and 13a-13. The Commission's claims for disgorgement and civil penalties against Burke remain pending.
The Commission's complaint was filed on June 3, 2004, and named Symbol, Burke and ten other former Symbol executives as defendants. The complaint alleges that from 1998 until early 2003, Burke and the other defendants engaged in a fraudulent scheme to inflate revenue, earnings and other measures of financial performance in order to create the false appearance that Symbol had met or exceeded its financial projections. The complaint further alleges that, with no regard for generally accepted accounting principles or their financial reporting obligations, Burke and the other defendants used the following schemes to align Symbol's reported financial results with market expectations:
- a "Tango sheet" process through which baseless accounting entries were made to conform the raw quarterly results to management's projections;
- the fabrication and misuse of restructuring and other non-recurring charges to artificially reduce operating expenses, create "cookie jar" reserves and further manage earnings;
- channel stuffing and other revenue recognition schemes; and
- the manipulation of inventory levels and accounts receivable data to conceal the adverse side effects of the revenue recognition schemes.
On June 3, 2004, Symbol consented to entry of a final judgment imposing, among other relief, a permanent injunction and a civil penalty in the amount of $37 million, and James Dean, one of the individual defendants, consented to a partial final judgment imposing permanent injunctive relief.
The United States Attorney's Office for the Eastern District of New York ("USAO") announced today that Burke has pled guilty to criminal charges based on the same conduct alleged in the Commission's complaint. In conjunction with his guilty plea, Burke also agreed to pay $1,907,156 to resolve a related civil forfeiture proceeding. The Commission acknowledges the assistance and cooperation of the USAO and the U.S. Postal Inspection Service in this matter.
http://www.sec.gov/litigation/litreleases/lr19086.htm
