The Securities and Exchange Commission said it has settled with six former executives and employees of Riverstone Networks who had been accused of inflating revenues at the communications router maker after they agreed to pay penalties and fines.
Judge Charles R. Breyer of the U.S. District Court of Northern California entered the injunctions and other relief against the six. The SEC alleged that from June 2001 through June 2002, they participated in a scheme to inflate Riverstone's publicly reported net revenues through improper revenue recognition on contingent sales, falsely reporting $19.1 million in revenues. The defendants neither admitted nor denied the allegations of the SEC complaint.
If the settlement is approved by the court, former CEO Romulus S. Pereira would pay a total of $450,000; former CFO Robert B. Stanton would pay $250,000; former executive vice president of sales L. John Kern would forfeit $472,496; former vice president of marketing Andrew D. Feldman would be penalized $396,096; former vice president of finance William F. McFarland would pay $40,000, and former director of sales operations Lori H. Cornmesser would forfeit $23,179.
Pereira, Stanton and Kern would also be barred for five years from acting as an officer or director of a public company.
Kern and Feldman also pled guilty to one felony count each of violating the internal accounting controls of a public company, and in December 2007, were each sentenced to three years of probation and fined $5,000.
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