SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 16757 \ October 5, 2000
ACCOUNTING AND AUDITING ENFORCEMENT RELEASE NO. 1330
Securities and Exchange Commission v. Walter Königseder,
Civil Action No. C-00-3668 (MJJ) (N.D. Cal. Filed Oct. 5, 2000)
SECURITIES AND EXCHANGE COMMISSION SUES FORMER INFORMIX CORPORATION SENIOR MANAGER FOR FRAUD AND OTHER VIOLATIONS
The Securities and Exchange Commission ("Commission") today filed a civil injunctive action in the United States District Court for the Northern District of California against Walter Königseder ("Königseder"), formerly a Vice President of Informix Corporation ("Informix" or "Company"). In its Complaint, the Commission alleges that Königseder approved, ratified, or directed a variety of actions that aided and abetted Informix's material overstatement of revenue and earnings for 1996 and the final three quarters of that year. The Commission further alleges that, after causing the Company to overstate its revenues and earnings, Königseder lied about his knowledge of, and involvement in, the transactions. According to the Complaint, as a result of his misconduct, Königseder violated, or aided and abetted violations of, antifraud, reporting, record-keeping, and internal control provisions of the Securities Exchange Act of 1934 ("Exchange Act").
According to the Complaint, Königseder approved and ratified secret side letter agreements in connection with software license sales contracts that made revenue recognition on those contracts improper, and he approved and signed a purported contract that mischaracterized the underlying transaction so that revenue could be recognized prematurely. To inflate revenues and earnings further, Königseder directed the Company to enter into a phony software license sales contract.
The Commission alleges that Königseder's misconduct caused the Company improperly to recognize approximately $25.5 million of revenue on six transactions and thus aided and abetted the Company's overstatement of quarterly and annual net income. According to the Complaint, Königseder subsequently signed a statement in which he lied about his knowledge of, and involvement in, the transactions for which revenue was recognized improperly.
The Commission seeks an order permanently enjoining Königseder from violating, or aiding and abetting violations of, sections 10(b), 13(a), 13(b)(2), and 13(b)(5) of the Exchange Act and Exchange Act rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1.
Separately today, the Office of the United States Attorney for the Northern District of California ("USAO") announced that it had indicted Königseder for wire fraud and criminal securities violations. Today's civil and criminal actions are the result of investigations by the Commission, the USAO, and the San Francisco office of the Federal Bureau of Investigation.
Previously, the Commission instituted and simultaneously settled an administrative proceeding against Informix. Informix Corp., Admin. Proc. No. 3-10130; SA Rel. No. 33-7788; SEA Rel. No. 34-42326; AAE Rel. No. 1215 (Jan. 11, 2000).
The Commission's investigation is continuing.