Bisys fined $25m for accounting and reporting violations
23 May 2007 | 3950 views | 0
New York financial BPO outfit Bisys has agreed to pay around $25 million to settle claims of improper accounting practices and financial reporting violations.
The settlement arises from charges filed by the US Securities and Exchange Commission (SEC) alleging that Bisys "violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act".
The SEC's complaint alleges that 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 vendor's insurance services division, says the SEC, but also occurred in other divisions of the company.
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.
Bisys has agreed to pay the $25 million fine without admitting or denying the charges.
Mark Schonfeld, director of the SEC's New York regional office, says: "This is a case study in internal control failures under earnings pressure. The settlement delivers meaningful relief to investors harmed by Bisys's misconduct."
In a statement Bisys chairman, interim CEO and president, Robert Casale, says: "We have improved controls and procedures in our accounting practices, replaced key individuals throughout the firm, and worked to foster high ethical standards and produce reliable financial reporting for our shareholders."
Earlier this month Bisys agreed to be acquired by Citigroup in an all-cash deal worth around $1.45 billion.