The Securities and Exchange Commission (SEC) has announced a settlement with the former chief financial officer of Beazer Homes USA to recover his bonus compensation and stock sale profits from the period when the Atlanta-based home builder was committing accounting fraud, according to an Aug. 30 announcement.
According to the SEC’s complaint, filed in federal court in Atlanta, James O’Leary is not personally charged with misconduct, but is still required under Section 304 of the Sarbanes-Oxley Act to reimburse Beazer more than $1.4 million that he received after Beazer filed fraudulent financial statements during fiscal year 2006. The SEC’s settlement with O’Leary is subject to court approval.
“Section 304 of the Sarbanes-Oxley Act encourages senior management to take affirmative steps to prevent fraudulent accounting schemes from occurring on their watch,” said Rhea Kemble Dignam, director of the SEC’s Atlanta regional office. “O’Leary received substantial incentive compensation and stock sale profits, while Beazer was misleading investors and fraudulently overstating its income.”
Without admitting or denying the SEC’s allegations, O’Leary agreed to reimburse Beazer $1,431,022 in cash within 30 days of entry of the court order approving the settlement. This amount includes O’Leary’s entire fiscal year 2006 incentive bonus: $1,024,764 in cash incentive compensation and $131,733 previously received from Beazer in exchange for all restricted stock units he received as additional incentive compensation for fiscal year 2006. The settlement amount also includes $274,525 in stock sale profits.
Earlier this year, the SEC reached a settlement with Beazer CEO Ian McCarthy to recover several million dollars in bonus compensation and stock profits that he received. Beazer settled an SEC enforcement action in September 2008, and the SEC charged its former chief accounting officer Michael Rand in July 2009. The litigation against Rand, whom the SEC claims perpetrated the fraud, is still ongoing.