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U.S. Securities and Exchange Commission


Litigation Release No. 20279 / September 13, 2007

SEC v. Brian E. Haylor, No. 07-cv-2757 (N.D. Ohio)

SEC Files Settled Accounting Fraud Action Against Brian E. Haylor

On September 12, the Commission filed a complaint in the United States District Court for the Northern District of Ohio charging Brian E. Haylor of Avon, Ohio, a former division controller for Ferro Corporation, with violations of the antifraud provisions of the Securities Exchange Act of 1934 (Exchange Act) and with aiding and abetting Ferro's violations of the reporting, books and records and internal control provisions of the Exchange Act.

The complaint alleges that, from at least March 2003 until his resignation from Ferro in June 2004, Haylor intentionally recorded false entries and failed to record entries he was required to make in Ferro's accounting records. Haylor's fraudulent conduct involved several accounts, including temporary accounts receivable, inventory, consignments and unrecorded liabilities, and caused Ferro to overstate its operating income by $5 million for 2003 and by $700,000 for the first quarter of 2004. On March 31, 2006, Ferro restated its financial results. Its restatement, which included errors unrelated to Haylor's conduct, reduced Ferro's operating from $24.2 million to $12.6 million for 2003, and from $19.3 million to $14.0 million for the first quarter of 2004.

Without admitting or denying the allegations in the Commission's complaint, Haylor consented to the entry of a final judgment, subject to court approval, permanently enjoining him from future violations of Sections 10(b), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13 and 13b2-1 thereunder. Haylor previously pled guilty to one count of securities fraud in a related criminal action on December 15, 2005. The United States District Court for the Northern District of Ohio sentenced Haylor to four months imprisonment, eight months of home confinement and two years of supervised release.



Modified: 09/13/2007