NOTE: The Securities and Exchange Commission announced that on June 10, 2004, following a seven-day trial, a jury in San Jose, California, returned a verdict in favor of the defendant, David Malmstedt.
U.S. Securities and Exchange Commission
Litigation Release No. 18209 / July 2, 2003
Accounting and Auditing Enforcement Release No. 1809 / July 2, 2003
Securities and Exchange Commission v. David Malmstedt and Mark Huetteman, Civil Action No. C-02-2427 JW (PVT) (N.D. Cal.) (filed May 21, 2002)
Court Enters Final Judgment Against Former Sales Executive of Legato Systems, Inc.
On June 16, 2003, the Honorable James Ware, United States District Judge for the Northern District of California, entered the Final Judgment of Permanent Injunction and Other Relief as to defendant Mark Huetteman ("Final Judgment"), based upon the defendant's consent entered in the action.
The Final Judgment, to which Huetteman consented without admitting or denying the Commission's allegations, enjoins Huetteman from violating the antifraud provisions of the federal securities laws (specifically, Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Exchange Act Rule 10b-5) and an internal controls provision (Section 13(b)(5) and from aiding and abetting violations of reporting and recordkeeping provisions (Sections 13(a) and13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-13, and Rule 13b2-1).
The Final Judgment further provides that Huetteman will pay disgorgement of $162,812, representing losses he avoided as a result of conduct alleged in the Commission's complaint. In addition, the judgment orders Huetteman to pay a $40,000 civil monetary penalty.
The Commission's complaint filed in 2002, alleges that Huetteman and others caused Legato fraudulently to record millions of dollars in revenue on sales orders, resulting in Legato materially overstating its revenue during three fiscal quarters of 1999 and for the fiscal year 1999.
For more information, see Litigation Release No. 17524 (May 21, 2002).