Dive Brief:
- Computer Sciences Corporation has agreed to pay a $190-million penalty to the SEC for allegedly manipulating financial results and failing to reveal problems about the company's contract with the U.K. National Health Service.
- Settlement agreements also included eight former company employees, including former CEO Michael Laphen, who must return $3.7 million to CSC and pay a $175,000 penalty; and former CFO Michael Mancuso, who must return close to $370,000 and also pay a $175,000 penalty.
- The SEC stated that Laphen allegedly allowed a plan to artificially increase profits to balance losses from the NHS contract. In addition, Laphen and Mancuso allegedly failed to disclose issues to investors and made misleading public statements as the contract.
Dive Insight:
"CSC repeatedly based its financial results and disclosures on the NHS contract it was negotiating rather than the one it actually had and misled investors about the true status of the contract," said Andrew J. Ceresney, director of SEC's Division of Enforcement. "The significant sanctions in this case against the company, CEO and CFO, reflect our focus on ensuring that such misconduct is vigorously pursued and punished."
The investigation also revealed that CSC allegedly worked with finance execs in Australia and Denmark to fraudulently manipulate the financial results of its businesses in those countries.