U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19121 / March 4, 2005
Accounting and Auditing Enforcement
Release No. 2200 / March 4, 2005
Securities and Exchange Commission v. Craig N. Cohen, Civil Action No. 4:05-CV- 371(AGF), U.S. District Court for the Eastern District of Missouri
SEC Files Fraud Charges Against Former TALX Corporation Executive Craig N. Cohen
Today, the Securities and Exchange Commission filed a complaint in the U.S. District Court for the Eastern District of Missouri against Craig N. Cohen, the former chief financial officer of TALX Corporation, a St. Louis-based provider of employment and income verification and other human resources services. In its complaint, the Commission alleges that Cohen violated the antifraud and other provisions of the federal securities laws.
According to the complaint, during fiscal 2001, and through a secondary offering of common stock completed on August 3, 2001, TALX placed emphasis on meeting its internal and external financial projections, and highlighted its earnings growth to the market. Cohen caused TALX, however, to meet its 2001 financial targets through fraudulent accounting maneuvers. The misstatements included an improper bill and hold transaction; recognizing revenue prematurely; capitalizing costs relating to a license agreement that should have been expensed; and expensing executive bonuses in the wrong period. As a result, TALX overstated its 2001 pre-tax income by approximately $2.1 million, or 65%, and inflated TALX's 2001 stock price leading up to the secondary stock offering on August 3, 2001. Cohen sold TALX shares shortly after TALX announced its false fiscal 2001 results. The Commission further alleges that Cohen made misleading statements to TALX's auditors.
The Commission charged Cohen, who is a licensed CPA, with causing TALX to make material financial misrepresentations in Forms 8-K, 10-K and 10-Q for fiscal years 2001 through the second quarter of 2004, and in its fiscal 2002 registration statement, and with violating Section 17(a) of the Securities Act of 1933, 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 aiding and abetting TALX's violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11 and 13a-13 thereunder. The Commission is seeking against Cohen a permanent injunction, an officer and director bar, disgorgement (with prejudgment interest), and civil penalties.
SEC Complaint in this matter