U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No.18402 / October 9, 2003
Accounting and Auditing Release No.1893 / October 9, 2003
Securities and Exchange Commission v. Gregory L. English, No.1:03-CV-02061 (COLLYER) (United States District Court for the District of Columbia).
FORMER CONTROLLER OF NCI BUILDING SYSTEMS, INC. SETTLES 10(b) CHARGE CONCERNING NCI'S OVERSTATED INVENTORY
NCI ALSO SETTLES CEASE-AND-DESIST PROCEEDING
A. The English Complaint
The U.S. Securities and Exchange Commission today filed a settled civil enforcement action in U.S. District Court for the District of Columbia against Gregory L. English, former corporate controller of NCI Building Systems, Inc. (NCI), a Houston-based manufacturer of metal products for the non-residential building industry. The complaint alleges:
Soon after, the employee retracted this initial conclusion and informed English that book inventory exceeded the physical counts by more than $2 million, requiring that English decrease the book inventory number. Despite this information, in August 2000, English proceeded to authorize the erroneous $2.6 million entry.
Without admitting or denying the allegations in the complaint, English consented to the entry of a Final Judgment permanently enjoining him from future violations of (or aiding and abetting violations of) Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1. The Final Judgment also imposes a $25,000 civil penalty and prohibits English from serving as an officer or director of a public company for five years.
B. The Cease-and-Desist Order Against NCI
The Commission also issued a settled cease-and-desist order today (the "Order") against NCI. The findings in the Order involved a number of accounting errors at the company, many of which were caused by the implementation of the MIS system in May 1999. The Order notes that the Commission took into account remedial acts promptly undertaken by the respondent and cooperation afforded the Commission staff.
NCI neither admitted nor denied the findings in the Order. In the Order, the Commission Ordered that NCI cease and desist from committing or causing any violations and any future violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder. NCI common stock trades on the New York Stock Exchange under the symbol NCS.