U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19135 / March 15, 2005
Accounting and Auditing Enforcement
Release No. 2208 / March 15, 2005
SECURITIES AND EXCHANGE COMMISSION v. BRYAN K. TREADWAY, Civ. No. 05-N-484 (PAC) (USDC D. Colorado).
The United States Securities and Exchange Commission ("Commission") announced that on March 15, 2005, it filed a complaint in the United States District Court for the District of Colorado against Bryan K. Treadway, a former assistant controller and later controller of Qwest Communications International, Inc. ("Qwest"). Treadway consented to the issuance of a Final Judgment ordering him to pay a $40,000 civil penalty, without admitting or denying any of the allegations in the complaint.
The Commission's complaint alleged that Treadway violated Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 13b2-1 and 13b2-2 thereunder, and was a cause of Qwest's violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13 in connection with Qwest's annual, quarterly, and current reports from the period ended June 30, 2001 through the period ended December 31, 2001, for Qwest's: (1) improper recognition of revenue from sales of irrevocable rights of use for the company's fiber optic cable and capacity; (2) recognition of revenue in an improper bill and hold transaction for an equipment sale; and (3) improper reduction in compensated absences liability resulting in the understatement of 2001 pre-tax loss by $71.3 million and failure to disclose the change in the accounting methodology for compensated absences.
In a related matter, a cease-and-desist order ("Order") was issued against Treadway, ordering him to cease and desist from committing or causing any violations and any future violations of Section 13(b)(5) of the Exchange Act and Exchange Act Rules 13b2-1 and 13b2-2, and from causing any violations and any future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11 and 13a-13. Treadway undertakes to cooperate in any related judicial or administrative proceeding or investigation commenced by the Commission or to which the Commission is a party. Treadway consented to the issuance of the Order without admitting or denying any of the findings in the Order. [In the Matter of Bryan K. Treadway, Sec. Exch. Act Rel. No. 34-51375.]
