Litigation Release No. 22432 / August 2, 2012
Accounting and Auditing Enforcement Release No. 3397 / August 2, 2012
SEC v. Mark Leslie, Kenneth E. Lonchar, Paul A. Sallaberry, Michael M. Cully, and Douglas S. Newton, Civil Action No. 07 CV 3444 (CW) (N.D. Cal. filed July 2, 2007)
SEC Settles Litigation With Former Veritas Software Corporation Chief Financial Officer
The U.S. Securities and Exchange Commission today announced that, on July 20, 2012, the United States District Court for the Northern District of California entered a settled final judgment against Kenneth E. Lonchar, the former Chief Financial Officer of Veritas Software Corporation, in SEC v. Mark Leslie, Kenneth E. Lonchar, Paul A. Sallaberry, Michael M. Cully, and Douglas S. Newton, Civil Action No. 07 CV 3444 (CW) (N.D. Cal. filed July 2, 2007).
The final judgment resolves the Commission’s case against Lonchar, the last remaining defendant in the Commission’s action against certain former Veritas Software Corporation executives. The Commission’s amended complaint alleges that Lonchar and other executives inflated Veritas’ reported revenues by approximately $20 million in connection with a software sale to America Online, Inc. The complaint further alleges that from at least 2000 until his resignation in 2002, Lonchar and others applied three improper accounting practices to “smooth” artificially Veritas’ financial results.
Without admitting or denying the allegations in the complaint, Lonchar consented to entry of a final judgment permanently enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and ordering him to pay disgorgement and prejudgment interest of $300,000 and a civil penalty of $100,000.
On August 2, 2012, the Commission issued an Order in a related, settled administrative proceeding suspending Lonchar from appearing or practicing before the Commission as an accountant with the right to request reinstatement after five (5) years from the date of the Order, pursuant to Rule 102(e) of the Commission’s Rules of Practice. The suspension is based on the entry of the final judgment in SEC v. Leslie, et al., enjoining Lonchar from future violations of the antifraud provisions of the Exchange Act. Without admitting to the findings in the Commission’s Order, except as to jurisdiction and the entry of the final judgment, Lonchar consented to the issuance of the Order.