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Litigation Release No. 20752 / September 29, 2008

Securities and Exchange Commission v. Carole Argo, Civil Case No. 07-1397 (RWR) (D.D.C.)

Court Enters Permanent Injunction and Other Relief against Carole Argo in Stock Options Backdating Case

The Securities and Exchange Commission today announced that on September 24, 2008, the Honorable Richard Roberts of the United States District Court for the District of Columbia entered a Final Judgment of permanent injunction and other relief, including a ten year officer and director bar, against Carole Argo ("Argo"), the former president, Chief Financial Officer and Chief Operating Officer of SafeNet, Inc. ("SafeNet"). Without admitting or denying the Commission's allegations, Argo consented to the entry of the Final Judgment. The judgment settles the Commission's claims against Argo in a civil action filed on August 1, 2007, in which the Commission alleged that Argo engaged in a fraudulent scheme to backdate option grants while she was an officer of SafeNet.

The Commission's complaint alleged that among other things, Argo was aware that SafeNet routinely granted in-the-money options, and she knowingly or recklessly failed to cause SafeNet to record a compensation expense as required by Generally Accepted Accounting Principles. Consequently, SafeNet reported materially misstated financial results for periods beginning in late-2000 through early-2006. The complaint further alleges that Argo regularly prepared, reviewed, and/or signed proxy statements, periodic reports, and registration statements that she knew, or was reckless in not knowing, contained materially false and misleading statements and omissions concerning SafeNet's financial condition and options granting practices.

The Final Judgment (i) permanently enjoins Argo from future violations of the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5; the periodic report certification provision, Section 13a-14 of the Exchange Act; the prohibitions against public company officers and directors falsifying accounting records and making false or misleading statements to an issuer's auditors, Exchange Act Rules 13b2-1 and 13b2-2; the prohibition on false or misleading statements in proxy statements filed by an issuer, Exchange Act Rule 14a-9; and the beneficial ownership of securities reporting provision, Exchange Act Rule 16a-3; and from aiding and abetting violations of the issuer periodic reporting, books and records, and internal controls provisions, Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Exchange Act Rules 12b-20, 13a-1, and 13a-13, (ii) imposes a ten year officer and director bar, and (iii) orders Argo to pay a civil penalty of $50,000 (which will be offset by any payment Argo makes toward the $1,000,000 fine that was imposed upon her in a parallel criminal prosecution).

As part of the settlement, the Commission today issued an administrative order, pursuant to Rule 102(e)(3) of the Commission's Rules of Practice, suspending Argo from appearing or practicing before the Commission as an accountant. Argo consented to the issuance of the order, without admitting or denying the Commission's findings.

The Commission acknowledges the assistance of the United States Attorney's Office for the Southern District of New York and the United States Postal Inspection Service, which conducted a separate parallel criminal investigation.

For additional information, please see Litigation Release No. 20221 (August 1, 2007).



Modified: 09/29/2008