Litigation Release No. 19840 / September 20, 2006

Accounting and Auditing Enforcement Release No. 2483 / September 20, 2006

Securities and Exchange Commission v. Walid H. Maghribi, Case No. C 065756 RMW (N.D. CA)


SEC Charges Ex-CEO of Bay Area Semiconductor Company with Failing to Prevent False Revenue Reporting

The Securities and Exchange Commission charged Walid H. Maghribi, former CEO, president and director of Milpitas, California-based Sipex Corporation, for his role in the company's improper reporting of revenue from certain purported sales transactions. Without admitting or denying the charges, Maghribi, of Los Gatos, California, has agreed to settle the claims against him by paying a $45,000 penalty and consenting to other sanctions.

The Commission's complaint, filed in federal court in San Jose, alleges that Maghribi allowed Sipex to report inflated financial information by recognizing revenue on two transactions in which the customers had no obligation to pay Sipex for the products. According to the Commission, Maghribi was aware of information suggesting that Sipex had made side agreements with the customers guaranteeing either a written right of return or a right not to pay Sipex.

Although these agreements prohibited Sipex from counting the deals as actual sales under generally accepted accounting principles, Maghribi failed to take steps to prevent their inclusion in the Company's revenue. As a result of his failure to act, in October 2003 and February 2004, Sipex issued press releases and financial statements which reported revenue that was improperly inflated by as much as 5% and in one instance exceeded Wall Street analysts' expectations.

The complaint charges Maghribi with violating Sections 17(a)(2) and (3) of the Securities Act of 1933, as well as Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13b2-1 thereunder. Simultaneous with the filing of the complaint, Maghribi has agreed to settle the charges without admitting or denying the Commission's allegations. Maghribi has consented to an order requiring him to pay a civil penalty of $45,000, and imposing a permanent injunction against future violations of the securities laws.

SEC Complaint in this matter