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U.S. Securities and Exchange Commission


Litigation Release No. 23897 / August 4, 2017

Securities and Exchange Commission v. Michael L. Hudson, No 1:17-cv-00520 (S.D. Ohio filed August 4, 2017)

SEC Charges Former Corporate Officer with Securities Fraud and Falsifying His Company's Books and Records

The Securities and Exchange Commission today announced fraud charges against a former corporate officer and assistant treasurer of an Ohio-based restaurant chain.

The SEC's complaint, filed the U.S. District Court for the Southern District of Ohio, alleges that from 2008 to 2014, while employed as the assistant treasurer of Frisch's Restaurants, Inc., Michael L. Hudson diverted payroll funds to accounts he controlled and falsified Frisch's accounting records to conceal his defalcation. Hudson then submitted the falsified records to Frisch's internal accounting personnel and its auditors in connection with the preparation and filing of the company's financial statements. Hudson also falsely certified to Frisch's chief financial officer that the company's internal control over financial reporting for which he was responsible was effective. In total, Hudson allegedly misappropriated over $3.9 million from Frisch's.

On September 22, 2016, Hudson pleaded guilty in federal district court in Ohio to charges of wire fraud and filing a false tax return and was sentenced to 60 months in prison, 3 years of supervised release and ordered, among other things, to pay restitution to Frisch's in the amount of approximately $3.1 million.

The SEC's complaint charges Hudson with violating Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5(a) and (c), 13b2-1 and 13b2-2 thereunder; and aiding and abetting Frisch's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-1. To settle the SEC's charges, Hudson agreed to the entry of a judgment imposing permanent injunctions, an officer-and-director bar, and ordering him liable for disgorgement of approximately $3.9 million, payment of which is deemed satisfied by the restitution ordered in the parallel federal criminal case. The settlement is subject to court approval. As a result of Hudson's felony conviction, pursuant to Rule 102(e)(2) of the Commission's Rules of Practice, he was immediately suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies.

The SEC's investigation was conducted by William McKean and Justin Sutherland. Amy Oliver and Daniel Wadley are leading the SEC's litigation.



Modified: 08/04/2017