The Securities and Exchange Commission has barred a former corporate vice president and a former controller for false accounting at an electronics company.
Donald Doody and Ronald Years, who were formerly the executive vice president of operations and the controller of a subsidiary, respectively, of New York-based IEC Electronics Corp., inappropriately overstated the company’s profits in financial statements by using false inventory accounting, according to the SEC.
Specifically, when Years’ subsidiary wasn’t performing well, the two inappropriately inflated the company’s work-in-process inventory to meet budgeted gross profit margins.
Doody is barred from serving as an officer or director of a public company for five years, while Years has been permanently suspending from practicing before the SEC as an accountant – including not participating in the financial reporting or audits of public companies.
“Company executives cannot use false accounting tactics to meet profit margins and other financial targets and expect to get away with it,” said Michele Layne, director of the SEC’s Los Angeles Regional Office. “Doody and Years made an ill-fated decision to pump up the numbers in financial statements relied upon by investors.”
Without admitting or denying the findings, IEC, Doody, and Years consented to the SEC’s order instituting a settled administrative proceeding. The company agreed to pay a $200,000 penalty, Doody agreed to pay $29,204.48 in disgorgement and interest plus a $25,000 penalty, and Years agreed to pay a $40,000 penalty.
Former IEC CEO William “Barry” Gilbert was not accused of any wrongdoing, but voluntarily returned $42,072 in incentive-based compensation and stock sale profits, as well as 19,616 shares of company stock, so the SEC did not need to pursue a clawback action under Section 304 of the Sarbanes-Oxley Act.
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