U.S. Securities and Exchange Commission
Litigation Release No. 18300 / August 21, 2003
SEC CHARGES IRVING DAVID WITH EMBEZZLEMENT AND FILING A FALSE SARBANES-OXLEY CERTIFICATION; CRIMINAL CHARGES ALSO ANNOUNCED
Securities and Exchange Commission v. Irving Paul David, 03 Civ. 6305 (S.D.N.Y.)(KMW)
The Securities and Exchange Commission announced today that it filed an enforcement action charging Irving Paul David, formerly an officer of two investment companies, with embezzlement, breach of fiduciary duty, and filing a false certification required by the Sarbanes-Oxley Act of 2002. This action is the first Commission enforcement proceeding involving an investment company Sarbanes-Oxley certification. Simultaneously, the Office of the United States Attorney for the Southern District of New York announced David's indictment on criminal charges arising from the alleged embezzlement.
The Commission's Complaint, filed in the United States District Court for the Southern District of New York, alleges that David, formerly an employee of Citigroup Global Markets, Inc., f/k/a Salomon Smith Barney, Inc., ("Citigroup Global Markets"), stole funds from two affiliated registered investment companies: Consulting Group Capital Markets Funds (the "Consulting Group Fund"), and Smith Barney World Funds Inc. (the "Smith Barney World Fund") (collectively, the "Funds"). In addition, at the very time that he was embezzling from the Funds, David signed a certification pursuant to the Sarbanes-Oxley Act in which he falsely stated that he had disclosed to the Consulting Group Fund's auditors and audit committee any fraud, whether material or not, involving management, when in fact he had made no such disclosure.
The Complaint alleges as follows:
The Complaint charges David with violating Section 15(d) of the Exchange Act and Sections 34(b) and 37 of the Investment Company Act, and with breach of fiduciary duty within the meaning of Section 36(a) the Investment Company Act. The Complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties. The litigation is pending.