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U.S. Securities and Exchange Commission


Litigation Release No. 20006 / February 16, 2007

Accounting and Auditing Enforcement Release No. 2561 / February 16, 2007

SEC v. Keith G. Baxter, et. al., (Civil Action No. 05-3843 RMW, N.D. Cal.)

SEC Settles With Keith G. Baxter

The Securities and Exchange Commission today announced that on February 14, 2007, the Honorable Ronald M. Whyte entered an order approving the parties' settlement. Pursuant to the terms of the settlement, Judge Whyte entered an order (i) of permanent injunction prohibiting Keith G. Baxter, former Chief Executive Officer of Cornerstone Propane Partners, LLP, from violations of the federal securities laws; (ii) requiring Baxter to pay a civil money penalty of $40,000; and (iii) prohibiting Baxter from acting as an officer or director for a period of three years. Baxter entered into the settlement and consented to the entry of the injunction without admitting or denying the allegations of the Commission's complaint.

The injunction prohibits future violations of Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1 and 13b2-2 thereunder and aiding and abetting violations of Sections 13(a) and 13(b)(2) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder.

The complaint alleged generally that Cornerstone's financial statements for fiscal year 2000 and 2001 did not comply with Generally Accepted Accounting Principles ("GAAP") because a Cornerstone subsidiary allegedly did not reconcile certain inter-company accounts in a timely manner which allegedly rendered the company's financial statements materially unreliable, and that Cornerstone allegedly failed to disclose the existence of this issue and that it could lead to the possibility of a write-down. The complaint further alleges that for these reasons, Cornerstone's fiscal year 2000 and 2001 Form 10-K and fiscal year 2001 10-Qs improperly represented that Cornerstone's financial statements complied with GAAP. The complaint further alleges that Baxter approved a September 28, 2001 press release that failed to adequately disclose the connection between these accounting problems and a related Q4 2001 non-cash charge.



Modified: 02/16/2007