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U.S. Securities and Exchange Commission


Litigation Release No. 20483 / March 7, 2008

Securities and Exchange Commission v. Baxter, et. al., (Civil Action No. 05-3843 RMW, N.D. Cal.)

SEC Settles With Richard D. Nye

The Securities and Exchange Commission today announced that on February 22, 2008, the Honorable Ronald M. Whyte entered an order approving the parties' settlement. Pursuant to the terms of the settlement, Judge Whyte entered an order (i) of permanent injunction prohibiting Richard D. Nye, former vice-president of finance and acting chief financial officer of Cornerstone Propane Partners, LLP, from violations of the federal securities laws; (ii) requiring Nye to pay a civil money penalty of $25,000; and (iii) prohibiting Nye from acting as an officer or director of a publicly held company for a period of three years. Nye entered into the settlement and consented to the entry of the injunction without admitting or denying the allegations of the Commission's complaint.

The injunction prohibits future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5 and 13b2-1 thereunder and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. The injunction did not include Rule 13b2-2.

The complaint alleged generally that during fiscal year 2000 and the first, second, and third quarters of 2001, a Cornerstone division was engaged in a massive project to verify its account balances. The complaint alleged that because the Cornerstone division was unable to substantiate millions of dollars of account balances, Cornerstone's financial statements were not prepared in conformity with Generally Accepted Accounting Principles ("GAAP"), and its financial statements were materially false and unreliable. The complaint also alleged that Cornerstone failed to disclose the potential effects that necessary adjustments to its accounts, once they were quantified, would have on its reported income; and its inability to properly consolidate accounts of its various divisions in light of the subsidiary's accounting problems. The complaint further generally alleged that Cornerstone issued a September 28, 2001 press release that concealed the nature of write-offs related to the verification of accounts, falsely claiming that the write-off resulted from the sale of certain business units rather than from a division's failure to properly record its accounts for several reporting periods.



Modified: 03/07/2008