U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19585 / March 2, 2006
Accounting and Auditing Enforcement Release No. 2391 /
March 2, 2006
SEC v. Symbol Technologies, Inc., et al., 04 CV 2267 (LDW)(EDNY)
Former General Counsel of Symbol Technologies, Inc. Consents to Permanent Injunctive Relief, Officer-and-Director Bar and Administrative Order Under Rule 102(E)
On February 7, 2006, the Honorable Leonard D. Wexler, United States District Judge for the Eastern District of New York entered a final judgment against Leonard Goldner ("Goldner"), the former General Counsel and Senior Vice President of Symbol Technologies, Inc. ("Symbol"). Goldner consented to entry of an order that prohibits him from acting as an officer or director of a public company and imposes permanent injunctive relief for violations of the relevant antifraud, corporate reporting, books and records and internal control provisions of the federal securities laws. Specifically, Goldner, without admitting or denying the allegations in the Commission's complaint, is permanently enjoined from violating, or engaging in conduct that would make him liable for violations of, Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2), 13(b)(5), 14(a), and 16(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Exchange Act Rules 10b-5, 12b-20, 13a-1, 13a-13, 13b2-1, 14a-3, 14a-9, and 16a-3. The Commission's claims for disgorgement and civil penalties against Goldner were withdrawn in view of Goldner's civil forfeiture payment of $2 million in connection with his guilty plea in a parallel criminal case.
The Commission instituted on February 27, 2006, and simultaneously settled an administrative proceeding pursuant to Rule 102(e) of the Commission's Rules of Practice against Goldner, an attorney and a member of the bar of the State of New York. The administrative proceeding was based on the entry of the final judgment against Goldner. Goldner consented, without admitting or denying the Commission's findings, to entry of an order suspending him from appearing or practicing before the Commission as an attorney.
The Commission's complaint was filed on June 3, 2004, and named Symbol, Goldner and ten other former Symbol executives as defendants. The complaint alleges that from 1998 until early 2003, the defendants engaged in a fraudulent scheme to inflate revenue, earnings and other measures of financial performance in order to create the false appearance that Symbol had met or exceeded its financial projections. While the accounting fraud was occurring, Goldner manipulated stock option exercise dates to enable select senior executives, including himself, to profit unfairly at the company's expense. Rather than use the actual exercise date as defined by the company's stock option plans, Goldner instituted, without board approval or public disclosure, a practice of selecting a more advantageous exercise date chosen from a 30-day "look-back" period so as to reduce the cost of the exercise to the executive or, in some cases, to decrease the executive's tax liability. To create the false appearance that these exercises occurred on the selected dates, Goldner had his staff backdate transactional documents and record the phony exercise dates in the forms on which the executives reported their stock acquisitions to the Commission and the public.
On October 27, 2004, Goldner pled guilty to criminal charges brought by the United States Attorney's Office for the Eastern District of New York ("USAO") based on the same conduct alleged in the Commission's complaint against Goldner. In conjunction with his guilty plea, Goldner also agreed to pay $2 million to resolve a related civil forfeiture proceeding.
On June 3, 2004, Symbol consented to entry of a final judgment imposing, among other relief, a permanent injunction and a civil penalty in the amount of $37 million, and James Dean, a former Manager and Director of Operations Finance, consented to entry of a partial final judgment imposing permanent injunctive relief. On February 17, 2005, Brian Burke, a former Senior Vice President, consented to entry of a partial final judgment imposing permanent injunctive relief and a bar prohibiting him from acting as an officer or director of a public company.
A separate complaint filed by the Commission on June 19, 2003, named Robert Korkuc, a former Chief Accounting Officer of Symbol, for his role in the fraudulent scheme. On May 11, 2005, Korkuc consented to entry of a partial final judgment imposing permanent injunctive relief and a bar prohibiting him from acting as an officer or director of a public company. Korkuc also settled an administrative proceeding pursuant to Rule 102(e) of the Commission's Rules of Practice by consenting, without admitting or denying the Commission's findings, to entry of an order suspending him from appearing or practicing before the Commission as an accountant.
The Commission acknowledges the assistance and cooperation of the USAO and the U.S. Postal Inspection Service in this matter.
For additional information see Litigation Release No. 19319 (August 1, 2005), Litigation Release No. 19086 (February 17, 2005), Litigation Release No. 18734 (June 3, 2004), Litigation Release No. 18194 (June 19, 2003), Litigation Release No. 18050 (March 25, 2003).