U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22199 / December 16 , 2011
Accounting and Enforcement Release No. 3346 / December 16, 2011
Securities and Exchange Commission v. Stuart W. Fuhlendorf, Civil Action No. C-09-1292 (MJP) (W.D. Wash.)
SEC SETTLES CHARGES AGAINST FORMER CFO OF SEATTLE-AREA TECHNOLOGY COMPANY
The United States Securities and Exchange Commission ("Commission") announced that on November 23, 2011, the Honorable Marsha J. Pechman, United States District Court Judge for the Western District of Washington, entered a judgment of permanent injunction against Stuart W. Fuhlendorf pursuant to a negotiated settlement of the Commission's claims against him.
Under the terms of the settlement, Fuhlendorf consented to the entry of final judgment. The final judgment enjoins Fuhlendorf from violating Sections 17(a)(2) and (3) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1, 13b2-2, and 13a-14 thereunder. Additionally, the final judgment bars Fuhlendorf from serving as an officer or director of a public company for three years pursuant to Section 21(d)(2) of the Exchange Act. The judgment does not impose a penalty or other monetary relief based upon Fuhlendorf's sworn financial statements. Under the terms of the settlement, Fuhlendorf neither admits nor denies the Commission's allegations.
On September 14, 2009, the Commission filed its complaint against Fuhlendorf, who lives in Golden, Colorado. The Commission's complaint alleged that Fuhlendorf, the former Chief Financial Officer of Isilon Systems, Inc. ("Isilon"), caused Isilon to improperly recognize revenue for multiple sales, including transactions with side agreements between Isilon and its customers precluding revenue recognition under GAAP. The complaint further alleged that Fuhlendorf misled Isilon's audit committee and auditors. Isilon ultimately restated $4.8 million in improper revenue for these transactions.
Fuhlendorf also consented to the entry of an administrative order, without admitting or denying the findings, suspending him, pursuant to Rule 102(e) of the Commission's Rules of Practice, from appearing or practicing as an accountant before the Commission, with the right to apply for reinstatement after three years.
For more information on earlier actions in this case, see LR-21210 (September 14, 2009).