U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20938 / March 10, 2009
Accounting and Auditing Enforcement Release No. 2946 / March 10, 2009
Securities and Exchange Commission v. Allen Barnett, et al., Civil Action No. 1:09-cv-00457 (D. D.C.) (EGS) (filed March 9, 2009)
SEC BRINGS SETTLED ACTIONS AGAINST FORMER CEO AND CFO OF ASTROPOWER, INC. FOR THEIR ROLES IN FINANCIAL FRAUD
On March 9, 2009, the Commission filed a settled civil fraud action in the United States District Court for the District of Columbia against Allen Barnett, the former CEO, and Thomas Stiner, the former CFO, of AstroPower, Inc., a Delaware manufacturer of solar electric power products. AstroPower is no longer an operating company as its common stock was cancelled and its assets liquidated via bankruptcy in 2004. Barnett and Stiner agreed to permanent injunctions; payment of civil penalties in the amount of $65,000 and $40,000, respectively; and other sanctions.
According to the Complaint, Barnett and Stiner made material misstatements, engaged in fraudulent accounting practices, and signed filings made with the Commission that they knew, or were reckless in not knowing, contained materially false and misleading financial statements. The Commission alleged that at the direction of Barnett and Stiner, and in contravention of Generally Accepted Accounting Principles, AstroPower improperly recognized approximately $4 million in revenues from four transactions executed over the course of the second and third quarters of 2002. According to the Complaint, as a result of improperly recognizing revenue from these transactions, AstroPower's net income was overstated by approximately $160,000 or 80% for the second quarter of 2002, and approximately $440,000 or 113% for the third quarter of 2002. The Commission alleged that these material misstatements of revenue and net income were included in Commission filings that Barnett and Stiner signed.
The Commission alleged that Barnett and Stiner violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Exchange Act Rules 10b-5, 13a-14, and 13b2-1 thereunder, and aided and abetted AstroPower's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20 and 13a-13 thereunder. The Commission further alleged that Stiner violated Exchange Act Rule 13b2-2. Without admitting or denying the allegations in the Complaint, Barnett and Stiner consented to the entry of final judgments enjoining them from future violations of these provisions of the federal securities laws, prohibiting them from acting as officers or directors of any public company, and imposing civil penalties. Stiner, without admitting or denying the Commission's findings, also consented to the institution of settled administrative proceedings pursuant to Rule 102(e)(3) of the Commission's Rules of Practice suspending him from appearing or practicing before the Commission as an accountant, based on the anticipated entry of an injunction against him.
