RealTime IT News

Peregrine in Fraud Settlement With SEC

Peregrine Systems , the e-commerce software company currently in bankruptcy, Monday said it has reached a settlement with the U.S. Securities and Exchange Commission (SEC) over charges of fraudulent accounting.

Without admitting guilt, the San Diego-based Peregrine said the settlement resolves all matters against it, except disgorgement of past profits or civil penalties, if there are any, related to close to three years of restated revenues.

The company has so far restated 11 quarters covering fiscal years 2000, 2001 and the first three quarters of fiscal year 2002. In all, the restatements shaved an estimated 40 percent out of its revenue picture.

The SEC's civil complaint and Peregrine's consent decree, which were filed Monday, were the result of accounting irregularities that came to light in May 2002, the company said. The SEC later brought civil charges of financial fraud against the company.

A U.S. District Court for the Southern District of California, which is overseeing the SEC's complaint, has to sign off on the settlement.

Peregrine said under the terms of the settlement, it has agreed to not violate federal securities laws and comply "on an accelerated basis" with the rules regarding financial data reporting as called for by the Sarbanes-Oxley Act of 2002.

In addition, the settlement calls for Peregrine to retain an internal auditor to insure that its financial results are accurately reported and establish a corporate compliance program with a compliance officer for an ongoing review of Peregrine's governance systems.

The deal also calls on Peregrine to launch a training program for Peregrine's officers and employees in order to prevent violations of federal securities laws.

And finally, it calls for the company to make a public statement that "fully and accurately discloses the current condition of its internal control structure" as well as its reporting procedures within its reorganization plan.

"The company's partial settlement with the SEC is an important step for Peregrine as the company moves toward emergence from Chapter 11 this summer," said Gary Greenfield, Peregrine's CEO, in a statement.

Greenfield is among a throng of new management that joined the company in June 2002 after senior management resigned in the face of the SEC accounting probe.

"The company has cooperated fully with the investigation by all governmental agencies since May 2002. We stand by our commitment to ensure that Peregrine's corporate governance, and financial policies and practices meet high standards," Greenfield's statement said.