(The news featured below is a selection from the news covered in Federal Securities Law Reporter, which is distributed to subscribers of Federal Securities Law Reporter.)

Company Treasurer Suspended in Connection with Inventory Reporting

The SEC claimed that a company treasurer, in order to increase the company's allowable borrowings and avoid default under its credit facility, caused the company to falsely report as inventory merchandise that was ordered but never shipped to the company. The SEC also alleged that this false reporting of in-transit inventory was a default under the terms of the credit facility. In addition, the company allegedly included the falsely inflated levels of inventory in its general ledger and thus reported false and inflated levels of inventory in the interim financial statements filed with the SEC on various Form 10-Qs.

In a previous judicial proceeding, the individual had been enjoined from future securities law violations. In the settled administrative proceeding, the Commission suspended him from appearing or practicing before the Commission as an accountant. However, under the terms of the order, he could, after three years, request consideration of his reinstatement. He consented to the issuance of the order without admitting or denying any of the allegations in the civil injunctive action.

Release No. 34-55434 is reported at ¶87,768.