Press Release: BISYS to Pay $25 Million to Settle Financial Reporting and Related Charges by SEC
summary
BISYS Group, Inc. agreed to pay $25 million to settle SEC charges for overstating earnings by $180 million from 2001 to 2003 through improper accounting in its Insurance Services division and other units, driven by earnings pressure and weak internal controls, without admitting guilt.
paragraph
BISYS Group, Inc. settled SEC charges by agreeing to pay $25 million in disgorgement and prejudgment interest for violating securities reporting, books-and-records, and internal control provisions. From July 2000 to December 2003, the company overstated pre-tax earnings by $180 million—$118 million from its Insurance Services division and $60.9 million from other units—through improper revenue recognition, inadequate reserves, and flawed commission accounting. The SEC also noted $20 million in ill-gotten gains from inflated debt and equity offerings, and while BISYS consented to a permanent injunction without admitting guilt, the investigation into individuals remains ongoing.
narrative
BISYS Group, Inc. agreed to pay $25 million in disgorgement and prejudgment interest to settle SEC charges stemming from widespread accounting fraud between July 2000 and December 2003. The company overstated its pre-tax earnings by approximately $180 million over fiscal years 2001–2003, with $118 million attributable to its Insurance Services division and $60.9 million from other divisions, primarily through improper revenue recognition, failure to reserve against aging receivables, and misreporting renewal and bonus commissions. These practices were fueled by management’s pressure to meet aggressive short-term earnings targets and systemic failures in internal controls, especially after acquisitions, where integration of accounting systems was inadequate. As a result, BISYS filed misleading financial statements with the SEC and used inflated results in shareholder reports, press releases, and offering documents, leading to $20 million in ill-gotten gains from convertible debt, stock, and options issued at artificially high prices. BISYS consented to a permanent injunction against future violations without admitting or denying the allegations, and the SEC acknowledged its extensive cooperation during the investigation. The SEC emphasized the case as a cautionary example of internal control failures under earnings pressure and continues to investigate individuals involved in the misconduct.
Classified accounting-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →
Parties
Andrew M. Calamariassociate director of the sec's new york regional officedirector of the sec's new york regional officeimproper accounting practicesinsurance services divisionmark k. schonfeldsec complaintSecurities and Exchange Commissionthe bisys group, inc.
Keywords
improper accountingaccounting practicesbisysaccountingmillionfinancialfinancial reportinginsurance servicesimpropercommission'sallegespracticesreportingreporting books-and-recordsbooks-and-records internal
Extracted insights
Dollar amounts 6
- $180.00M $180 million $100M–$1B
- $118.00M $118 million $100M–$1B
- $60.90M $60.9 million $10M–$100M
- $25.00M $25 Million $10M–$100M
- $25.00M $25 million $10M–$100M
- $20.00M $20 million $10M–$100M
Entities 9
- person Andrew M. Calamari
- agency associate director of the sec's new york regional office
- agency director of the sec's new york regional office
- person improper accounting practices
- person insurance services division
- person mark k. schonfeld
- agency sec complaint
- agency Securities and Exchange Commission
- company the bisys group, inc.
Triples 10
- The BISYS Group, Inc. agreed to pay $25 million in disgorgement and prejudgment interest
- The BISYS Group, Inc. violated financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934
- SEC filed charges against The BISYS Group, Inc.
- BISYS officers and employees engaged in improper accounting practices from July 2000 through December 2003
- Improper accounting practices resulted in overstatement of $180 million in reported financial results for fiscal years 2001, 2002, and 2003
- Insurance Services division overstated pre-tax earnings by $118 million for fiscal years 2001, 2002, and 2003
- BISYS other divisions overstated pre-tax earnings by $60.9 million for fiscal years 2001, 2002, and 2003
- Mark K. Schonfeld is Director of the SEC's New York Regional Office
- Andrew M. Calamari is Associate Director of the SEC's New York Regional Office
- SEC complaint filed in federal court in Manhattan on May 23, 2007
Extracted body text (5,542c)
BISYS to Pay $25 Million to Settle Financial Reporting and Related Charges by SEC FOR IMMEDIATE RELEASE 2007-100 Washington, D.C., May 23, 2007 - The Securities and Exchange Commission announced today the filing and settlement of charges that The BISYS Group, Inc., a leading provider of financial products and support services, violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934. BISYS has agreed to settle the case, without admitting or denying the Commission's allegations. The company will consent to the entry of a judgment upon charges of violating the reporting, books-and-records and internal controls provisions of the securities laws. It has agreed pay approximately $25 million in disgorgement and prejudgment interest. Mark K. Schonfeld, Director of the Commission's New York Regional Office, said, "This is a case study in internal control failures under earnings pressure. The settlement delivers meaningful relief to investors harmed by BISYS's misconduct." Andrew M. Calamari, Associate Director of the Commission's New York Regional Office, said, "The Commission continues to focus on accounting improprieties such as these at public companies, and the resulting harm to investors. We aim to deter such conduct before it occurs and, if it does, to compensate investors and prevent recidivism." The Commission's complaint, filed today in federal court in Manhattan, alleges that from July 2000 through December 2003, former BISYS officers and employees engaged in a variety of improper accounting practices that resulted in an overstatement of the company's reported financial results for the fiscal years ended June 30, 2001, 2002, and 2003 by roughly $180 million. The improper accounting practices were primarily based in the company's Insurance Services division, but also occurred in other divisions of the company. The Commission's complaint alleges that the improper accounting practices were a product of a corporate focus by former management on meeting aggressive, short-term earnings targets and a lax internal control environment. Throughout the relevant period, the Insurance Services division was a major factor in the company's success in achieving its earnings targets. The division's finance department allegedly responded to the corporate focus on making numbers by engaging in improper accounting practices. Although Insurance Services had grown rapidly through a series of acquisitions, during the relevant period, the company failed to adopt and implement adequate controls over the accounting function of the acquired companies as they were integrated. Among other things, the company lacked adequate controls for reconciling account balances or tracking receivables and lacked controls adequate to ensure that the assumptions used in estimating revenue and renewal commissions were valid. With respect to Insurance Services, the complaint alleges that BISYS improperly recorded as its own revenue commissions earned by companies acquired by BISYS before they were acquired; failed adequately to reserve against a substantial aging receivable balance; improperly accounted for renewal and bonus commissions; and made other improper accounting entries that overstated revenue or reduced expenses. The Commission's complaint further alleges that BISYS also engaged in improper accounting practices in other divisions of the company. The complaint alleges that the improper accounting practices within the Insurance Services division resulted in an overstatement of BISYS's reported pre-tax earnings by roughly $118 million for the fiscal years ended June 30, 2001, 2002, and 2003, and by 34.3%, 38.9%, and 20.6%, respectively, in each of those fiscal years. The improper accounting practices in BISYS's other divisions overstated the company's pre-tax earnings by an additional $60.9 million for the same period. The complaint alleges that as a result of these and other improper accounting practices, BISYS filed annual and quarterly reports with the Commission that included financial statements that were inaccurate and misleading. In addition, the company's overstated financial results were incorporated in annual reports to shareholders, press releases, and offering documents including registration statements. The complaint alleges that by engaging in this conduct, BISYS violated the financial reporting, books-and-records, and internal controls provisions of the Exchange Act. The complaint further alleges that BISYS received approximately $20 million in ill-gotten gains as a result of its issuance of convertible debt, stock, and options at prices that were inflated as a result of its violations. Without admitting or denying the Commission's allegations, BISYS has agreed to settle the charges by consenting to a permanent injunction against further violations of the relevant reporting, books-and-records, and internal controls provisions of the federal securities laws, and it has agreed pay disgorgement and prejudgment interest totaling approximately $25 million. The Commission acknowledges BISYS's extensive cooperation during the investigation. The Commission's investigation continues as to others. # # # Contacts: Mark K. Schonfeld (212) 336-1020 Director, SEC New York Regional Office Andrew M. Calamari (212) 336-0042 Associate Director, SEC New York Regional Office Additional materials: Litigation Release No. 20125 http://www.sec.gov/news/press/2007/2007-100.htm Home | Previous Page Modified: 05/23/2007
OCR text (5,542c · plain-text · 99% conf)
BISYS to Pay $25 Million to Settle Financial Reporting and Related Charges by SEC FOR IMMEDIATE RELEASE 2007-100 Washington, D.C., May 23, 2007 - The Securities and Exchange Commission announced today the filing and settlement of charges that The BISYS Group, Inc., a leading provider of financial products and support services, violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934. BISYS has agreed to settle the case, without admitting or denying the Commission's allegations. The company will consent to the entry of a judgment upon charges of violating the reporting, books-and-records and internal controls provisions of the securities laws. It has agreed pay approximately $25 million in disgorgement and prejudgment interest. Mark K. Schonfeld, Director of the Commission's New York Regional Office, said, "This is a case study in internal control failures under earnings pressure. The settlement delivers meaningful relief to investors harmed by BISYS's misconduct." Andrew M. Calamari, Associate Director of the Commission's New York Regional Office, said, "The Commission continues to focus on accounting improprieties such as these at public companies, and the resulting harm to investors. We aim to deter such conduct before it occurs and, if it does, to compensate investors and prevent recidivism." The Commission's complaint, filed today in federal court in Manhattan, alleges that from July 2000 through December 2003, former BISYS officers and employees engaged in a variety of improper accounting practices that resulted in an overstatement of the company's reported financial results for the fiscal years ended June 30, 2001, 2002, and 2003 by roughly $180 million. The improper accounting practices were primarily based in the company's Insurance Services division, but also occurred in other divisions of the company. The Commission's complaint alleges that the improper accounting practices were a product of a corporate focus by former management on meeting aggressive, short-term earnings targets and a lax internal control environment. Throughout the relevant period, the Insurance Services division was a major factor in the company's success in achieving its earnings targets. The division's finance department allegedly responded to the corporate focus on making numbers by engaging in improper accounting practices. Although Insurance Services had grown rapidly through a series of acquisitions, during the relevant period, the company failed to adopt and implement adequate controls over the accounting function of the acquired companies as they were integrated. Among other things, the company lacked adequate controls for reconciling account balances or tracking receivables and lacked controls adequate to ensure that the assumptions used in estimating revenue and renewal commissions were valid. With respect to Insurance Services, the complaint alleges that BISYS improperly recorded as its own revenue commissions earned by companies acquired by BISYS before they were acquired; failed adequately to reserve against a substantial aging receivable balance; improperly accounted for renewal and bonus commissions; and made other improper accounting entries that overstated revenue or reduced expenses. The Commission's complaint further alleges that BISYS also engaged in improper accounting practices in other divisions of the company. The complaint alleges that the improper accounting practices within the Insurance Services division resulted in an overstatement of BISYS's reported pre-tax earnings by roughly $118 million for the fiscal years ended June 30, 2001, 2002, and 2003, and by 34.3%, 38.9%, and 20.6%, respectively, in each of those fiscal years. The improper accounting practices in BISYS's other divisions overstated the company's pre-tax earnings by an additional $60.9 million for the same period. The complaint alleges that as a result of these and other improper accounting practices, BISYS filed annual and quarterly reports with the Commission that included financial statements that were inaccurate and misleading. In addition, the company's overstated financial results were incorporated in annual reports to shareholders, press releases, and offering documents including registration statements. The complaint alleges that by engaging in this conduct, BISYS violated the financial reporting, books-and-records, and internal controls provisions of the Exchange Act. The complaint further alleges that BISYS received approximately $20 million in ill-gotten gains as a result of its issuance of convertible debt, stock, and options at prices that were inflated as a result of its violations. Without admitting or denying the Commission's allegations, BISYS has agreed to settle the charges by consenting to a permanent injunction against further violations of the relevant reporting, books-and-records, and internal controls provisions of the federal securities laws, and it has agreed pay disgorgement and prejudgment interest totaling approximately $25 million. The Commission acknowledges BISYS's extensive cooperation during the investigation. The Commission's investigation continues as to others. # # # Contacts: Mark K. Schonfeld (212) 336-1020 Director, SEC New York Regional Office Andrew M. Calamari (212) 336-0042 Associate Director, SEC New York Regional Office Additional materials: Litigation Release No. 20125 http://www.sec.gov/news/press/2007/2007-100.htm Home | Previous Page Modified: 05/23/2007