WASHINGTON (Legal Newsline) — FMC Technologies will pay $2.5 million after allegations it overstated profits in one of its business segments, the Securities and Exchange Commission (SEC) has announced.
Two then-executives at the company also agreed to settlements.
According to the SEC, business segment controller Jeffrey Favret and business unit controller Steven Croft received pressure to improve the financial performance of the energy infrastructure segment. The two individuals allegedly proceeded to artificially reduce the value of a liability the company recorded for employee paid time off. The individuals' actions led to the segment logging pre-tax operating profit improvements of $800,000.
“Companies must accurately report their financial performance without regard to internal targets. Favret and Croft manipulated results to create the impression that the business was performing better than reality,” said Stephanie Avakian, deputy director of the SEC’s Division of Enforcement.
Without admitting to or denying findings, the defendants consented to the SEC order. Favret will pay a $30,000 penalty and Croft will pay $10,000. Both individuals cannot appear before the SEC as accountants for at least two years.
Beth Groves and Paul Harley handled the case for the SEC, supervised by Rami Sibay.