SEC Recovers CFO's Bonus and Stock Sale Profits Received During Beazer Homes Accounting Fraud
The SEC ordered former Beazer Homes CFO James O’Leary to repay $1.43 million in bonus and stock sale profits earned during fiscal year 2006 under Section 304 of Sarbanes-Oxley, despite no personal fraud charges, as the company misled investors through accounting fraud.
The SEC secured a $1.43 million settlement from James O’Leary, former CFO of Beazer Homes USA, requiring reimbursement of incentive compensation received during fiscal year 2006, when the company committed accounting fraud. The amount includes $1.02 million in cash bonus, $132,000 from restricted stock units, and $275,000 in stock sale profits, all clawed back under Section 304 of the Sarbanes-Oxley Act. Although O’Leary was not personally charged with misconduct, the settlement follows prior actions against Beazer and its CEO Ian McCarthy, while former Chief Accounting Officer Michael Rand remains under litigation.
The SEC ordered former Beazer Homes CFO James O’Leary to repay $1,431,022 in bonus and stock sale profits earned during fiscal year 2006, a period when the company engaged in accounting fraud that misled investors and overstated income. Although O’Leary was not personally charged with any wrongdoing, the SEC enforced Section 304 of the Sarbanes-Oxley Act, which mandates clawbacks of incentive compensation from senior executives when their company files materially false financial statements. The repayment consists of $1,024,764 in cash incentive compensation, $131,733 from restricted stock units, and $274,525 in stock sale profits, all of which were received while Beazer was in material non-compliance with financial reporting requirements. This settlement, subject to court approval, follows earlier enforcement actions against Beazer Homes itself in 2008 and its CEO Ian McCarthy earlier in 2011. The former Chief Accounting Officer, Michael Rand, who allegedly perpetrated the fraud, remains under active litigation. The SEC emphasized that Section 304 holds executives accountable for financial misstatements occurring under their watch, regardless of individual intent or direct involvement. The case underscores the agency’s commitment to using clawback provisions to recover ill-gotten gains from senior management during periods of corporate fraud.
Exhibits & Attached Documents (1)
Extracted insights
- $1.43M $1,431,022 $1M–$10M
- $1.40M $1.4 million $1M–$10M
- $1.02M $1,024,764 $1M–$10M
- $275K $274,525 $100K–$1M
- $132K $131,733 $100K–$1M
- person accounting fraud
- person beazer homes usa
- person fraudulent financial statements
- person michael rand
- agency sec enforcement action
- agency Securities and Exchange Commission
- SEC Recovers CFO's Bonus and Stock Sale Profits
- SEC Announced Settlement with Former CFO of Beazer Homes USA
- Beazer Homes USA Committed Accounting Fraud
- James O’Leary Must Reimburse Beazer More Than $1.4 Million
- Beazer Filed Fraudulent Financial Statements
- SEC Reached Settlement with Beazer CEO Ian McCarthy
- Beazer Settled SEC Enforcement Action
- SEC Charged Michael Rand
- Michael Rand Perpetrated Fraud
- Beazer Misled Investors
- O’Leary Agreed to Reimburse Beazer $1,431,022
SEC Recovers CFO's Bonus and Stock Sale Profits Received During Beazer Homes Accounting Fraud FOR IMMEDIATE RELEASE 2011-172 Washington, D.C., Aug. 30, 2011 – The Securities and Exchange Commission today announced a settlement with the former chief financial officer of Beazer Homes USA to recover his bonus compensation and stock sale profits from the period when the Atlanta-based homebuilder was committing accounting fraud. According to the SEC’s complaint filed in federal court in Atlanta, James O’Leary is not personally charged with misconduct, but is still required under Section 304 of the Sarbanes-Oxley Act to reimburse Beazer more than $1.4 million that he got after Beazer filed fraudulent financial statements during fiscal year 2006. The SEC’s settlement with O’Leary is subject to court approval. Additional Materials SEC Complaint Litigation Release No. 22074 Earlier this year, the SEC reached a settlement with Beazer CEO Ian McCarthy to recover several million dollars in bonus compensation and stock profits that he received. Beazer settled an SEC enforcement action in September 2008, and the SEC charged its former chief accounting officer Michael Rand in July 2009. The litigation against Rand, who perpetrated the fraud, is still ongoing. “Section 304 of the Sarbanes-Oxley Act encourages senior management to take affirmative steps to prevent fraudulent accounting schemes from occurring on their watch,” said Rhea Kemble Dignam, Director of the SEC’s Atlanta Regional Office. “O’Leary received substantial incentive compensation and stock sale profits while Beazer was misleading investors and fraudulently overstating its income.” Section 304 requires reimbursement by some senior corporate executives of certain compensation and stock sale profits received while their companies were in material non-compliance with financial reporting requirements due to misconduct. This can include an individual who has not been personally charged with the underlying misconduct or alleged to have otherwise violated the federal securities laws. Without admitting or denying the SEC’s allegations, O’Leary agreed to reimburse Beazer $1,431,022 in cash within 30 days of entry of the court order approving the settlement. This amount includes O’Leary’s entire fiscal year 2006 incentive bonus: $1,024,764 in cash incentive compensation and $131,733 previously received from Beazer in exchange for all restricted stock units he received as additional incentive compensation for fiscal year 2006. The settlement amount also includes $274,525 in stock sale profits. # # # For more information about this enforcement action, contact: Rhea Kemble Dignam Director, SEC’s Atlanta Regional Office (404) 842-7610 William P. Hicks Associate Director, Enforcement, SEC’s Atlanta Regional Office (404) 842-7675 http://www.sec.gov/news/press/2011/2011-172.htm Home | Previous Page Modified: 08/30/2011
SEC Recovers CFO's Bonus and Stock Sale Profits Received During Beazer Homes Accounting Fraud FOR IMMEDIATE RELEASE 2011-172 Washington, D.C., Aug. 30, 2011 – The Securities and Exchange Commission today announced a settlement with the former chief financial officer of Beazer Homes USA to recover his bonus compensation and stock sale profits from the period when the Atlanta-based homebuilder was committing accounting fraud. According to the SEC’s complaint filed in federal court in Atlanta, James O’Leary is not personally charged with misconduct, but is still required under Section 304 of the Sarbanes-Oxley Act to reimburse Beazer more than $1.4 million that he got after Beazer filed fraudulent financial statements during fiscal year 2006. The SEC’s settlement with O’Leary is subject to court approval. Additional Materials SEC Complaint Litigation Release No. 22074 Earlier this year, the SEC reached a settlement with Beazer CEO Ian McCarthy to recover several million dollars in bonus compensation and stock profits that he received. Beazer settled an SEC enforcement action in September 2008, and the SEC charged its former chief accounting officer Michael Rand in July 2009. The litigation against Rand, who perpetrated the fraud, is still ongoing. “Section 304 of the Sarbanes-Oxley Act encourages senior management to take affirmative steps to prevent fraudulent accounting schemes from occurring on their watch,” said Rhea Kemble Dignam, Director of the SEC’s Atlanta Regional Office. “O’Leary received substantial incentive compensation and stock sale profits while Beazer was misleading investors and fraudulently overstating its income.” Section 304 requires reimbursement by some senior corporate executives of certain compensation and stock sale profits received while their companies were in material non-compliance with financial reporting requirements due to misconduct. This can include an individual who has not been personally charged with the underlying misconduct or alleged to have otherwise violated the federal securities laws. Without admitting or denying the SEC’s allegations, O’Leary agreed to reimburse Beazer $1,431,022 in cash within 30 days of entry of the court order approving the settlement. This amount includes O’Leary’s entire fiscal year 2006 incentive bonus: $1,024,764 in cash incentive compensation and $131,733 previously received from Beazer in exchange for all restricted stock units he received as additional incentive compensation for fiscal year 2006. The settlement amount also includes $274,525 in stock sale profits. # # # For more information about this enforcement action, contact: Rhea Kemble Dignam Director, SEC’s Atlanta Regional Office (404) 842-7610 William P. Hicks Associate Director, Enforcement, SEC’s Atlanta Regional Office (404) 842-7675 http://www.sec.gov/news/press/2011/2011-172.htm Home | Previous Page Modified: 08/30/2011