Securities And Exchange Commission Vs. Richard Hawkins

1461 words - 6 pages

Securities and Exchange Commission vs. Richard H. Hawkins

While the widely exposed and discussed trials of WorldCom's and Tyco's top executives were all over the media, one of the most interesting cases of securities fraud was happening without any public acknowledgement.
Richard Hawkins, ex-CFO of a health service industry giant McKesson, was accused and later brought to court for inflating revenue at McKessonHBOC. The acquisition of HBOC, a medical software company, happened long after Hawkins became the CFO, but right before the management of both companies decided to falsify the facts.
It began with a written press release of the preliminary financial results for the quarter and ...view middle of the document...

The contract was signed on April 5 the same year. The senior management thought that backdating the sales and purchases would raise the company's revenues up to the desired levels. In order to cover their actions, the company created a false delivery receipt that showed the date of the delivery as March 31, 1999, while in reality the product was delivered in April. Both, the information about the $25 Million purchase of hardware from Data General as well as the return agreement concealed from the public.
On April 21, the management of McKesson met with Teresa Briggs, a Deloitte & Touche public accountant. They were notified "that the recording of revenue on the Data General transaction did not conform with Generally Accepted Accounting Principles and was an accounting error." ( the U.S. Securities and Exchange Commission, p.7) Later that day, Hawkins decided to approve the press release, disregarding the fact that Deloitte & Touche asked to consult with the Audit Committee first.
The defendant knowingly avoided the system of internal accounting controls of McKesson HBOC, which caused the companies to falsify their accounting records. There were several reasons why data General transaction was fraudulent. First of all, the deal was backdated; secondly it gave the company an unconditional right to return the product that was not sold and last, but not least, the transaction was a trade that wasn't regarded as one. Through side letters and agreements they provided the buyer with the right to cancel the contract or return the product if some of the requirements were not met. Generally Accepted Accounting Principles "preclude recognition of revenue from contingent contracts, until the contingency is satisfied." (Securities and Exchange Commission v. Charles W. McCall, United States District Court for the Northern District of California, Civil Action No. CO3-2603-SC, p.1)
According to the court, Hawkins "violated Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1, and 13b2-2 thereunder. The Commission is seeking to enjoin Mr. Hawkins from committing future violations of these provisions, compel him to pay disgorgement, prejudgment interest, and civil monetary penalties, and to bar Mr. Hawkins from serving as an officer or director of a public company." (U.S. Securities and Exchange Commission, p.8) The defendant knowingly avoided the system of internal accounting controls of McKesson HBOC, which caused the companies to falsify their accounting records.
If the defendant were to be found guilty, he would have to face maximum 25 years in prison and $2 million in fines.
Mr. Hawkins left the corporation prior to any decisions made by the court.
After the assumed scam was publicly announced, the company's stock fell from $65 to $34, causing the investors up to $9 Billion in loss, and a row of shareholder lawsuits.
Hawkins was indicted in March, 20004 by the grand jury "on charges of conspiracy, securities...

Other Essays Like Securities And Exchange Commission Vs. Richard Hawkins

Vz 10k Sec Essay


Bernie Madoff Essay

703 words - 3 pages front man pleads guilty to securities fraud, investment adviser fraud, making false filings to the Securities and Exchange Commission, and obstructing the IRS”, (Bernie Madoff. (n.d.). Wikipedia). Cohmad Securities Corporation was brought up on charges by the Securities Exchange Commission for “actively marketing investment opportunities with Madoff while knowingly or recklessly disregarding facts indicating that Madoff was operating a fraud

Commodity Exchange Market in Bangladesh

886 words - 4 pages regulators. • Experts & government officials have stressed the necessity of a commodity exchange market in different times. Even, government declared to take a pilot project for this. But yet, no remarkable good news form treasury side about it. • The only matter is that government passed Securities and Exchange Commission (Amendment) bill 2012 [Securities and Exchange Commission Act, 1993] and the Securities and Exchange (Amendment) Bill 2012


1199 words - 5 pages Defining a Security Which of the following transactions is subject to registration requirements of the Securities Act of 1933? A. The public sale of stock of a trucking company regulated by the Interstate Commerce Commission. B. A public sale of municipal bonds issued by a city government. C. The issuance of stock by a publicly-traded corporation to its existing shareholders because of a stock split. D. The public sale by a

Financial Restatement

899 words - 4 pages professionals. Investors were scrambling to protect their investments, the Securities Exchange Commission was cracking down hard while Hertz was scrambling to correct their errors and restore faith in the public. Financial mistakes are costly, therefore every company must set and follow both internal and external controls in order to avoid them and to be a company that investor, the public and the government can rely on. .   References


3538 words - 15 pages therefore information should not be construed as unbiased. Five Star / Providence and its outside sources use certain data derived from the U.S. Securities and Exchange Commission (SEC) filings, public information and data compiled by other vendors. The reader should verify all claims and do his/ her own research and due diligence before investing in any securities mentioned. Guests of Providence’s website, www., readers of Five

Jp Morgan

1423 words - 6 pages , or taxpayer once again will pick up the bill of this never ending tall tale. 1. - Discuss how administrative agencies like the Securities and Exchange Commission (SEC) The Commodities Futures Trading Commission (CFTC) takes action in order to be effective in preventing high-risk gambles in securities/banking a foundation of the economy. The SEC is responsible for protecting U.S. investors from potential loss of income by maintaining fair and

Kim Park (B): Liabilities

3392 words - 14 pages (frequently called a “current report”) with the Securities and Exchange Commission.26 24 Aaron Zitner, “Pentium flaw not expected to damage Intel financially,” Boston Globe, November 30, 1994, p. B1. 25 Aaron Zitner, “Consumers get break on computer chip,” Boston Globe, December 21, 1994, p. 62. 26 The 8-K or “current report” is a form filed with the Securities and Exchange Commission and is used to publicly announce significant events in a more

Accounting Regulatory Bodies

841 words - 4 pages Accounting Regulatory Bodies Sean McPheters September 8, 2008 ACC 300 University of Phoenix Accounting Regulatory Bodies Rules and regulations are a major factor in establishing order and fairness around the world. Without such regulations, the world as we know it would be a very different kind of place. Accountancy does not have an exception to these rules. The Securities and Exchange Commission, the International Accounting

Quality Manager

2536 words - 11 pages public in the United States through the Securities and Exchange Commission (SEC) filings. Prior to 2001, US law restricted trading such that insiders mainly traded during windows when their inside information was public, such as soon after earnings releases (Stein, 2001). When trading stocks within your own company, you must report all your earnings from the trades to the Securities and Exchange Commission (SEC). The SEC is a government entity put

Press Release

674 words - 3 pages PRESS RELEASE DILLON Luxury Doggie Corporation – CFO Resigns DILLON Luxury Doggie Corporation, America’s first traded luxury dog accessory chain announced Ms. April Buggers has resigned from her position as the Chief Financial Officer. The announcement comes on the heels of an ongoing investigation by the U.S. Securities and Exchange Commission (SEC) of the DILLON Luxury Doggie Corporation’s accounting practices used by the company

Related Papers

Securities And Exchange Act Essay

1376 words - 6 pages Marie Broadturn Financial Reporting II The Securities Act of 1933 was the first securities act that congress put into effect to protect consumers (Hazen, 2003). The purpose of this act was so investors could make informed decisions before they purchased securities (Sarkar). Before issuing stock to the public a corporation must register the security with the Security and Exchange Commission (SEC) using a registration statement (Securities

Securities And Exchange Board Of India (Sebi)

2032 words - 9 pages SEBI, Established in 1988 and became a fully autonomous body by the year 1992 with defined responsibilities to cover both development & regulation of the market. Region wise SEBI addresses and contact numbers are given so that investor grievances regarding CIS and for any other information may be contacted. Securities and Exchange Board of India (SEBI) is a board (autonomous body) created by the Government of India in 1988 and given

Accounting Standards Essay

615 words - 3 pages corporate name and through its own counsel, with the approval of the SEC, in any Federal, State or other court. Although a U.S. organization they have the jurisdiction to also control out of country firms that have affect on U.S. clients and their investments. (Auditing, 2003-2011) Another entity that oversees accounting firms is the U.S. Securities and Exchange Commission (SEC). Established in 1934 during the Great Depression the enabled the

Initial Offerring Essay

1128 words - 5 pages federal level. These laws have been developed to protect the investor but in no way guarantee the investor will make money. They were first developed in the 1930’s as a result of the chaos in the market crash of 1929. “The 1933 act covers new issues of securities, and the 1934 act is devoted to trading in existing securities,” (Mayo, 2012 pg. 43). Since the acts would require administrative oversight, the Securities and Exchange Commission