Looking to avoid the publicity of a trial, the country's largest trash hauler will pay $26.8 million to cover most of the costs of a settlement between former executives and the Securities and Exchange Commission.
The settlement by Waste Management Inc. was approved in U.S. District Court in Chicago. Originally filed in 2002, the SEC suit had accused Waste Management's founder and former chair, Dean Buntrock, and three other former executives of failing to report expenses, postponing costs and filing false financial statements, in order to meet earnings targets between 1992 and 1997.
A new chief executive of the company ordered a review of the company's accounting practices in late 1997, eventually uncovering the problems and leading to a restatement of $1.7 billion in earnings. At the time, the restatement was the largest in the country's history.
In 2001, Waste Management agreed to pay $457 million to settle a class-action lawsuit alleging securities-law violations, and received about $20 million in a related settlement with now-defunct auditor Arthur Andersen LLP. At the time of that settlement, Buntrock reportedly agreed to pay a $2.3 million fine, and Andersen later paid another $7 million to settle with the SEC.
Company bylaws obligated Waste Management to pay the former executives' legal expenses, including fines. According to filings, Waste Management has already spent $37 million on the SEC investigation and defending the executives, and had estimated the costs of going to trial at another $32.5 million.
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