Banking News – SEC Charges Former Executives and Accountants With Fraud at British Subsidiary of Medical Devices Company 
FOR IMMEDIATE RELEASE
2012-21
Washington, D.C., Jan. 30, 2012 – The Securities and Chat Fee today charged four former senior executives and accountants at the British subsidiary of an Indiana-based manufacturer of medical devices and aerospace harvest for their roles in an accounting fraud that was so enveloping that it distorted the fiscal statements of the parent company.
The SEC also reached settlements with the company’s former CEO and current CFO, who were not caught up or aware of the scheme at the subsidiary, to recover bonus compensation and stock profits they expected while the fraud was in the works and inflating company profits.
The SEC alleges that vice head for European operations Richard J. Senior, finance boss Matthew Bell, controller Lynne Norman, and management accountant Shaun P. Whiteley orchestrated and carried out the fraud at Thornton Precision Gears (TPC), which is the Sheffield, England-based subsidiary of NYSE-listed Symmetry Medical Inc. The accounting scheme caught up the systematic irony of expenses and exaggeration of assets and revenues at TPC, and much distorted Symmetry’s fiscal statements for a three-year period.
The four executives and accountants, as well as Symmetry in a break administrative proceeding, agreed to settle the SEC’s charges, and the subsidiary’s two outside auditors formerly of Ernest & Young LLP UK agreed to suspensions for their unsatisfactory audits.
“The accounting fraud orchestrated by TPC executives had a ripple effect right up to the financials of the parent company. Symmetry shareholders were investing their money – and Symmetry and TPC executives were collecting their bonuses – based in part on extravagant numbers,” said Stephen Cohen, Normal Boss of the SEC’s Rift of Enforcement. “We also found noteworthy failures by two outside auditors, which helped this fraud to take up again invisible. Accountants who do before the SEC, counting those who audit foreign subsidiaries of U.S. registrants, need to make sure their audits conform to U.S. auditing values or they won’t be allowed to do before the SEC.”
According to the SEC’s protest filed in federal court in South Bend, Ind., Symmetry’s annual fiscal statements for 2005 and 2006 as well as other exposure periods were much misstated as a result of terrible behavior in the exposure of TPC’s financials. Senior, Bell and Norman made fake certifications as to the suitability of the fiscal in rank reported to Symmetry by TPC, and lied to TPC’s outside auditors. Meanwhile, Senior and Bell each expected bonuses and sold Symmetry stock at prices they knew or rudely overlooked were illegally extravagant by the accounting fraud taking place at TPC.
In a break protest also filed in the same federal court, the SEC is seeking refund for bonuses and other incentive-based and equity-based compensation expected by Symmetry’s former CEO Brian S. Moore under Section 304 of the Sarbanes-Oxley Act. Under the agreement, subject to court praise, Moore agreed to compensate $450,000 to Symmetry.
The SEC also instituted break settled administrative proceedings against Symmetry and its CFO Fred L. Hite. The SEC finds that Hite failed to provide an domestic audit status report as regards TPC to Symmetry’s Audit Group in July 2006. Even if the domestic audit status report had not learned the fraud at TPC, it did raise the the makings for deeper harms there. Hite also failed to compensate Symmetry for bonuses, other compensation, and Symmetry stock-sale proceeds he expected while the fraud occurred at the subsidiary (as vital by SOX Section 304). Hite agreed to pay a $25,000 penalty and compensate $185,000 to Symmetry. For its part, Symmetry agreed to a stop-and-desist order against future fiscal exposure, books-and-records and domestic reins violations.
The SEC unconnectedly instituted and settled administrative proceedings against two normal chartered accountants in the United Kingdom – Christopher J. Kelly and Margaret Hebb née Whyte – who were the former audit partner and audit manager on Ernest & Young LLP UK’s audits of TPC for its 2004 to 2006 fiscal years (in the case of Kelly) and its 2005 and 2006 fiscal years (in the case of Hebb). The SEC’s order finds that Kelly and Hebb engaged in inappropriate certified conduct by, among other things, failing to by the book audit TPC’s fiscal proclamation receivable balances and supply. The order suspends both Kelly and Hebb from appearing or involved before the SEC as accountants, with the chance to seek recall after two years.
The SEC acknowledges the help of the United Kingdom’s Fiscal Air force Power in this matter.
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For more in rank about this enforcement action, contact:
Stephen L. Cohen
Normal Boss, SEC’s Rift of Enforcement
202-551-4472
SEC.gov Updates: Press Releases – http://www.sec.gov/news/press/2012/2012-21.htm
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