CSC will pay a $190 million SEC fine to settle accounting fraud charges. The CSC accounting scandal comes amid reports that Hewlett-Packard Co. last month ended potential takeover discussions with CSC.
According to a June 5 statement from the SEC: "The Securities and Exchange Commission today charged Computer Sciences Corporation and former executives with manipulating financial results and concealing significant problems about the company’s largest and most high-profile contract. The SEC additionally charged former finance executives involved with CSC’s international businesses for ignoring basic accounting standards to increase reported profits."
In response, the CSC agreed to pay a $190 million penalty to settle the charges, and five of the eight charged executives agreed to settlements, the SEC indicated.
Among the executives who settled: Former CEO Michael Laphen agreed to return to CSC more than $3.7 million in compensation under the clawback provision of the Sarbanes-Oxley Act and pay a $750,000 penalty. Also, former CFO Michael Mancuso agreed to return $369,100 in compensation and pay a $175,000 penalty, the SEC statement indicated.
Meanwhile, CSC finance executives Robert Sutcliffe, Edward Parker and Chris Edward are contesting the charges against them, the SEC stated.
The CSC accounting controversy emerges only a few weeks after HP allegedly walked away from takeover discussions with CSC. It's unclear if HP performed due diligence on CSC, and/or if HP was aware of the SEC's investigation into CSC's accounting practices.
HP's due diligence practices have come under fire in the past. After HP acquired Autonomy in 2011, HP alleged that former Autonomy executives participated in accounting fraud before the deal closed. Those former Autonomy executives deny wrongdoing, but the HP and the former Autonomy executives remain locked in a legal battle.
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