Press Release: SEC Seeks to Distribute $10 Million Civil Penalty to i2 Technologies, Inc. Investors; 2006-11; Jan. 20, 2006
Press Release: SEC Seeks to Distribute $10 Million Civil Penalty to i2 Technologies, Inc. Investors; 2006-11; Jan. 20, 2006, No. 3:04-CV-1250
i2 Technologies, Inc. settled SEC charges for inflating $1 billion in software license revenues from 1998 to 2002 by paying a $10 million civil penalty and nominal $1 disgorgement, after which the SEC proposed distributing those funds—along with an $85 million private class settlement—to injured investors via a Fair Fund under Sarbanes-Oxley, excluding attorney or distribution fees.
i2 Technologies, Inc. agreed to pay a $10 million civil penalty and $1 disgorgement in June 2004 to settle SEC charges alleging it misrepresented approximately $1 billion in software license revenues between 1998 and 2002 through accounting fraud, violating federal securities antifraud, reporting, and internal controls provisions. The SEC sought to establish a Fair Fund under the Sarbanes-Oxley Act to hold the penalty and accrued interest, proposing to merge it with an existing $85 million private class action settlement fund to maximize investor recovery. The SEC explicitly barred use of the Fair Fund for attorneys’ fees or distribution costs, and the court approved notice of the plan with a 30-day public comment period ending February 17, 2006.
i2 Technologies, Inc. settled SEC charges in June 2004 without admitting or denying wrongdoing, agreeing to pay a $10 million civil penalty and a nominal $1 disgorgement after the Commission alleged that the company systematically inflated approximately $1 billion in software license revenues from 1998 through the first three quarters of 2002. This accounting fraud led to materially false financial filings and violated federal securities laws governing reporting, record-keeping, internal controls, and antifraud provisions. In January 2006, the SEC requested the court to establish a Fair Fund under the Sarbanes-Oxley Act to hold the penalty and accrued interest, proposing to combine it with an existing $85 million private securities class action settlement fund to efficiently return funds to injured investors. The SEC insisted that none of the Fair Fund be used to pay private class attorneys’ fees or distribution agent costs, ensuring maximum recovery for victims. The court approved the SEC’s proposal to publish notice of the distribution plan, allowing interested parties until February 17, 2006, to file written objections. The action reflected the SEC’s commitment to returning penalties directly to harmed investors, as envisioned by Sarbanes-Oxley, and leveraged the pre-existing private settlement infrastructure to streamline the process. The case, SEC v. i2 Technologies, Inc., was pending in the U.S. District Court for the Northern District of Texas (Dallas Division).
Extracted insights
- $1.00B $1 billion ≥$1B
- $85.00M $85 million $10M–$100M
- $10.00M $10 Million $10M–$100M
- $10.00M $10 million $10M–$100M
- person katherine addleman
- agency Securities and Exchange Commission
- company to distribute $10 million civil penalty to i2 technologies, inc.
- SEC Seeks to Distribute $10 Million Civil Penalty to i2 Technologies, Inc.
- SEC asked the court to authorize distribution of the $10 million civil penalty and disgorgement
- The Commission has asked the court to establish a Fair Fund under the Sarbanes-Oxley Act of 2002
- The Commission has requested that the Fair Fund be transferred to and joined for distribution with an approximate $85 million settlement fund
- The Commission proposes that no part of the Fair Fund be used to pay the private class attorneys' fees or the distribution agent's fees
- Katherine Addleman commented We are pleased to return these funds to investors injured by i2's wrongdoing
- The Commission alleged that i2 misstated approximately $1 billion of software license revenues
- The Commission alleged that i2's conduct violated the antifraud, reporting, record-keeping and internal controls provisions of the federal securities laws
- i2 settled these charges without admitting or denying the Commission's substantive findings or allegations
- i2 paid a $10 million civil penalty and nominal $1 disgorgement
- i2 consented to a Commission order to cease-and-desist from such violations
- The court has granted the Commission's request to publish notice of its proposal to distribute to injured investors
- Any person has until February 17, 2006 to file written objections with the court, i2�s counsel and the Commission�s counsel
SEC Seeks to Distribute $10 Million Civil Penalty to i2 Technologies, Inc. Investors Interested Persons Have 30 Days to Comment upon SEC's Proposed Distribution Plan FOR IMMEDIATE RELEASE 2006-11 Washington, D.C., Jan. 20, 2006 - On Jan. 6, 2006, the Securities and Exchange Commission asked the court overseeing its accounting fraud case against i2 Technologies, Inc. to authorize distribution of the $10 million civil penalty and disgorgement that i2 paid to settle the Commission's charges. The Commission has asked the court to establish a Fair Fund under the Sarbanes-Oxley Act of 2002, to hold the civil penalty, disgorgement and accrued interest. The Commission has further requested that, after a tax administrator files any reports on the Fair Fund required by law, the Fair Fund be transferred to and joined for distribution with an approximate $85 million settlement fund previously established in the private securities class action against i2 arising from the same events. The Commission proposes that no part of the Fair Fund be used to pay the private class attorneys' fees or the distribution agent's fees. Katherine Addleman, Associate District Administrator of the Commission's Fort Worth office, commented, "We are pleased to return these funds to investors injured by i2's wrongdoing, as contemplated by the Sarbanes-Oxley Act. We believe that distributing these funds through the existing private class action settlement fund is the most efficient way to do this under the circumstances of this case." In its civil suit and related administrative proceeding against i2, the Commission alleged that, for the four years ended Dec. 31, 2001, and the first three quarters of 2002, i2 misstated approximately $1 billion of software license revenues. As a result, i2's periodic filings with the Commission and earnings releases during this period materially misrepresented i2's revenues and earnings. The Commission further alleged that i2's conduct violated the antifraud, reporting, record-keeping and internal controls provisions of the federal securities laws. In June 2004, i2 settled these charges without admitting or denying the Commission's substantive findings or allegations. As part of that settlement, i2 paid a $10 million civil penalty and nominal $1 disgorgement. It also consented to a Commission order to cease-and-desist from such violations. See Litigation Rel. No. 18741 (June 9, 2004). The court has granted the Commission's request to publish notice of its proposal to distribute to injured investors. Any person who wishes to comment on or object to the Commission�s proposal has until February 17, 2006 to file written objections with the court, i2�s counsel and the Commission�s counsel. Interested persons should go to the Litigation Releases section of the Commission's website (www.sec.gov) for more information. The Commission's case is styled SEC v. i2 Technologies, Inc., Civil Action No. 3:04-CV-1250, in the United States District Court for the Northern District of Texas (Dallas Division). # # # For further information contact: Katherine Addleman (817) 978-6425 Additional materials: Litigation Release 19535A http://www.sec.gov/news/press/2006-11.htm Home | Previous Page Modified: 01/20/2006
SEC Seeks to Distribute $10 Million Civil Penalty to i2 Technologies, Inc. Investors Interested Persons Have 30 Days to Comment upon SEC's Proposed Distribution Plan FOR IMMEDIATE RELEASE 2006-11 Washington, D.C., Jan. 20, 2006 - On Jan. 6, 2006, the Securities and Exchange Commission asked the court overseeing its accounting fraud case against i2 Technologies, Inc. to authorize distribution of the $10 million civil penalty and disgorgement that i2 paid to settle the Commission's charges. The Commission has asked the court to establish a Fair Fund under the Sarbanes-Oxley Act of 2002, to hold the civil penalty, disgorgement and accrued interest. The Commission has further requested that, after a tax administrator files any reports on the Fair Fund required by law, the Fair Fund be transferred to and joined for distribution with an approximate $85 million settlement fund previously established in the private securities class action against i2 arising from the same events. The Commission proposes that no part of the Fair Fund be used to pay the private class attorneys' fees or the distribution agent's fees. Katherine Addleman, Associate District Administrator of the Commission's Fort Worth office, commented, "We are pleased to return these funds to investors injured by i2's wrongdoing, as contemplated by the Sarbanes-Oxley Act. We believe that distributing these funds through the existing private class action settlement fund is the most efficient way to do this under the circumstances of this case." In its civil suit and related administrative proceeding against i2, the Commission alleged that, for the four years ended Dec. 31, 2001, and the first three quarters of 2002, i2 misstated approximately $1 billion of software license revenues. As a result, i2's periodic filings with the Commission and earnings releases during this period materially misrepresented i2's revenues and earnings. The Commission further alleged that i2's conduct violated the antifraud, reporting, record-keeping and internal controls provisions of the federal securities laws. In June 2004, i2 settled these charges without admitting or denying the Commission's substantive findings or allegations. As part of that settlement, i2 paid a $10 million civil penalty and nominal $1 disgorgement. It also consented to a Commission order to cease-and-desist from such violations. See Litigation Rel. No. 18741 (June 9, 2004). The court has granted the Commission's request to publish notice of its proposal to distribute to injured investors. Any person who wishes to comment on or object to the Commission�s proposal has until February 17, 2006 to file written objections with the court, i2�s counsel and the Commission�s counsel. Interested persons should go to the Litigation Releases section of the Commission's website (www.sec.gov) for more information. The Commission's case is styled SEC v. i2 Technologies, Inc., Civil Action No. 3:04-CV-1250, in the United States District Court for the Northern District of Texas (Dallas Division). # # # For further information contact: Katherine Addleman (817) 978-6425 Additional materials: Litigation Release 19535A http://www.sec.gov/news/press/2006-11.htm Home | Previous Page Modified: 01/20/2006