U.S. Securities and Exchange Commission
Litigation Release No. 18523 / December 24, 2003
Accounting and Auditing Enforcement Release No. 1935 / December 24, 2003
SEC Files Settled Civil Fraud Action Against Vivendi Universal, S.A., Its Former CEO, Jean-Marie Messier, and Its Former CFO, Guillaume Hannezo
Defendants Agree to Pay Over $51 Million in Disgorgement and Civil Penalties
Complaint Alleges Fraud Between December 2000 and July 2002, Including False Press Releases, Improper Adjustments to Earnings, and Failure to Disclose Future Commitments
Securities and Exchange Commission v. Vivendi Universal, S.A., Jean-Marie Messier, and Guillaume Hannezo, 03-CIV-10195 (S.D.N.Y.)(filed December 23, 2003)
The Securities and Exchange Commission (Commission) announced today that it filed a settled enforcement action against Vivendi Universal, S.A. (Vivendi), a media and environmental services conglomerate, its former CEO, Jean-Marie Messier (Messier), and its former CFO, Guillaume Hannezo (Hannezo). The settlements include Vivendi's consent to pay a $50 million civil money penalty. The settlements also include Messier's agreement to relinquish his claims to a €21 million severance package that he negotiated just before he resigned his positions at Vivendi, and payment of disgorgement and civil penalties by Messier and Hannezo that total over $1 million.
The Commission's Complaint describes a course of conduct by Vivendi, Messier, and Hannezo that disguised Vivendi's cash flow and liquidity problems, improperly adjusted accounting reserves to meet earnings before income taxes, depreciation, and amortization (EBITDA) targets, and failed to disclose material financial commitments, all in violation of the antifraud provisions of the federal securities laws.
Specifically, the Commission's Complaint includes the following allegations:
All of the defendants consented to the settlements without admitting or denying the Commission's allegations. The settled action permanently enjoins Vivendi, Messier, and Hannezo from further violations of the federal securities laws and includes other substantial relief:
The Commission intends to direct that disgorgement and penalties paid in this case be paid to defrauded investors, including those who held Vivendi's ordinary shares and its American Depository Shares during the time period alleged in the Commission's Complaint, pursuant to Section 308 (Fair Funds for Investors) of the Sarbanes-Oxley Act of 2002.
The €21 million payment, now valued at approximately $25 million (including interest), to which Messier is relinquishing his claim has already been placed in an escrow account as a result of the Commission's successful litigation pursuant to Section 1103 of the Sarbanes-Oxley of 2002. On the SEC's motion, the District Court in New York ordered Vivendi to place those funds in escrow on September 24, 2003.
The Commission acknowledges the cooperation of the United States Attorney's Office for the Southern District of New York and the Autorité des marches financiers, formerly the Commission des Opérations de Bourse. The Commission's investigation is continuing.
See also Litigation Release No. 18352 (September 16, 2003)