U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18954 / November 2, 2004
Accounting and Auditing Enforcement
Release No. 2131 / November 2, 2004
SEC v. David Rivard, 04 Civ. 1464 (E.D.N.Y.)(Glasser, I.L.);
SEC v. David Kaplan, 04 Civ. 1465 (E.D.N.Y.)(Glasser, I.L.).
FINAL JUDGMENTS IMPOSING CIVIL PENALTIES, DISGORGEMENT, PERMANENT INJUNCTIONS AND OTHER RELIEF ENTERED AGAINST DEFENDANTS DAVID RIVARD AND DAVID KAPLAN
The Securities and Exchange Commission announced that on November 1, 2004, the United States District Court for the Eastern District of New York entered final judgments on consent against David Rivard and David Kaplan, former vice presidents of finance at Computer Associates International, Inc., ("CA"), fully resolving the Commission's litigation against those two defendants. Rivard consented, without admitting or denying the allegations against him, to a final judgment that requires him to disgorge $83,700 in ill-gotten gains and interest and imposes a $75,000 civil penalty. Kaplan consented, without admitting or denying the allegations against him, to a final judgment that requires him to disgorge $128,770 in ill-gotten gains and interest and imposes a $100,000 civil penalty. The final judgments also reincorporate equitable relief that Rivard and Kaplan previously consented to in partial judgments entered by the court at the time the Commission filed the complaints. The equitable relief includes permanent injunctions prohibiting Rivard and Kaplan from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and from aiding and abetting any violations of Sections 10(b), 13(a) and 13(b)(2) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13. In addition, the court permanently barred both Rivard and Kaplan from serving as an officer or director of a publicly held company. On April 8, 2004, the Commission filed complaints alleging that Rivard and Kaplan participated in a widespread practice that resulted in the improper recognition of revenue by CA, one of the world's largest software companies. During at least CA's fiscal year 2000, which ran from April 1, 1999 through March 31, 2000, CA prematurely recognized revenue from software contracts that had not yet been consummated, in violation of Generally Accepted Accounting Principles. The Commission's complaints allege that, based on this conduct, Rivard and Kaplan violated Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1 and 13b2-2 thereunder. The complaints further allege that Rivard and Kaplan are also liable for aiding and abetting CA's violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder.
The Commission's investigation is continuing.
For further information see Litigation Releases No. 18552 (January 22, 2004), No. 18665 (April 8, 2004) and No. 18891 (September 22, 2004).