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U.S. Securities and Exchange Commission


Litigation Release No. 20862 / January 22, 2009

Accounting and Auditing Enforcement Release No. 2922 / January 22, 2009

Securities and Exchange Commission v. Catherine R. McEnroe, Noreen O'Loughlin and Martin R. von Ruden, Civil No. CV-09-0249 (LDW) (E.D.N.Y., filed Jan. 22, 2009)

SEC Files Settled Enforcement Action against Three Former Managers at Cablevision Systems Corporation in Connection with Improper Recognition of Expenses

The United States Securities and Exchange Commission (Commission) today filed a settled civil action against Catherine R. McEnroe, Noreen O'Loughlin and Martin von Ruden in United States District Court for the Eastern District of New York, alleging they violated provisions of the Federal securities laws prohibiting the falsification of certain books, records or accounts in connection with improper expense recognition at Cablevision Systems Corporation (Cablevision), and seeking civil money penalties. The Commission's complaint alleges that from at least 1999 through mid-2003, contrary to Generally Accepted Accounting Principles, Cablevision recognized certain costs as current expenses when, in fact, the expenses should not have been recognized in those periods. These improper "prepays," as the practice was referred to, occurred because employees prepared and submitted inaccurate invoices and other documents in order to accrue expenses earlier than when they in fact should have been accrued. These improperly recognized expenses were reflected in Cablevision's books, records and accounts and caused Cablevision to overstate expenses in earlier fiscal periods and understate expenses in later periods. As a result, Cablevision's reports to the public and the Commission for the period 1999 through mid-2003 were inaccurate and caused Cablevision to restate its financial statements filed with the Commission for the period 2000 through the first nine months of 2003.

The Commission's complaint alleges that McEnroe, O'Loughlin and von Ruden, while serving as officers and managers of significant business units of Cablevision, directed or were aware of improper prepays and signed inaccurate payment authorization forms that caused improper prepays, and that they thereby violated Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 13b2-1 thereunder. Without admitting or denying the allegations in the Commission's complaint, McEnroe, O'Loughlin and von Ruden consented to final judgments ordering them to pay civil penalties of $30,000, $15,000, and $15,000, respectively.

In a related settled cease-and-desist proceeding against them, and also without admitting or denying the Commission's factual findings in its Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order, McEnroe, O'Loughlin and von Ruden each also consented to an administrative order to cease and desist from committing or causing any violations and any future violations of Exchange Act Section 13(b)(5) and Rule 13b2-1 thereunder.

Separately, the Commission today announced that it instituted settled cease-and-desist proceedings against Cablevision for improper expense recognition. For further information, see Release No. 34-59277 / Jan. 22, 2009.

SEC Complaint



Modified: 01/26/2009