After more than two years of legal maneuvering, the Securities and Exchange Commission settled the last of its charges in its investigation of Xerox Corp.'s alleged earnings manipulation.

SEC Director of Enforcement Linda Chatman Thomsen said that the settlement included the largest penalties ever imposed on individual auditors.

The three former and current KPMG partners agreeing to permanent restrictions and SEC suspensions were:

  • Ronald Safran, the KPMG engagement partner on the Xerox audit for 1998 and 1999;
  • Michael Conway, the senior engagement partner on the Xerox audit for 2000; and,
  • Anthony Dolanski, the engagement partner on the Xerox audit for 1997.

A fourth partner, Thomas Yoho, the SEC concurring review partner for KPMG on the Xerox engagement from 1997-2000, accepted an SEC censure. None of the four admitted or denied the SEC's allegations.Subject to court approval of the settlement, Safran and Conway will each pay a $150,000 fine, and Dolanski will pay a $100,000 fine. The trio will also be suspended from practicing before the SEC as accountants. Safran can reapply in three years, Conway in two, and Dolanski in one.
In the spring of 2005, KPMG agreed to pay $22.5 million for its failed audits of Xerox, and later that year, six former senior executives of Xerox also struck deals with the SEC . Regulators have said that the accounting fraud began at Xerox in 1997, allowing the company to overstate its financial results by $1.5 billion over four years. The SEC's original complaint alleged that KPMG and its partners should have known about the improper accounting.According to associate director of enforcement Paul R. Berger, the SEC's cases against Xerox, KPMG and the audit partner settlements netted more than $55.2 million in penalties.

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