Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Regulation Daily, April 19, 2016

Logitech to settle SEC fraud charges for $7.5 million

By Kevin Kulling, J.D.

The SEC announced that it has settled two fraud cases involving alleged accounting failures that left investors without accurate views of company finances. Technology manufacturer Logitech International will pay $7.5 million to settle the charges, while three former executives at battery manufacturer Ener1 will pay penalties for the company materially overstating revenues and assets for year end 2010 and the first quarter of 2011.

Logitech. In the action against Logitech, the SEC said that the company agreed to settle charges that it fraudulently inflated its financial results to meet earnings guidance and committed other accounting related violations during a five year period. In addition, Logitech’s controller at the time, Michael Doktorczyk, agreed to pay a civil penalty of $50,000 and Sherralyn Bolles, the then-director of accounting, agreed to pay $25,000 for violations related to the company’s warranty accrual accounting and failure to amortize intangibles from an earlier acquisition.

Logitech, Doktorczyk, and Bolles also agreed to cease and desist from committing future violations of the relevant securities laws.

Separately, the SEC filed a complaint in federal court against the firm’s former chief financial officer Erik Bardman and former controller Jennifer Wolf. The complaint, filed in the Northern District of California, alleges that they deliberately minimized the write-down of millions of dollars of excess component parts for which Logitech had excess inventory.

Logitech’s former CEO, Gerald Quindlen, who was not accused of any misconduct, returned $194,487 in incentive-based compensation and stock sale profits received during the period of accounting violations, pursuant to Section 304(a) of the Sarbanes-Oxley Act, according to the SEC.

Ener1. The settlement by former executives at Ener1 involves alleged overstated revenues and assets. The misstatements stemmed from management’s failure to impair investments and receivables related to an electric car manufacturer that was one of its largest customers.

Charles Gassenheimer, the former CEO and chairman of the board, agreed to pay a penalty of $100,000 to settle the violations. Jeffrey Seidel, the firm’s former chief financial officer agreed to a $50,000 penalty, while Robert Kamischke, former chief accounting officer, agreed to pay $30,000.

The SEC also settled an action involving Robert Hesselgesser, the engagement partner for PricewaterhouseCoopers audit of Ener1’s financial statements. The SEC said that Hesselgesser violated PCAOB and professional auditing standards when he failed to perform sufficient procedures to support his audit conclusions that Ener1 management had appropriately accounted for its assets and revenues.

Hesselgesser agreed to be suspended from appearing and practicing before the SEC as an accountant. He can apply for reinstatement after two years.

In settling the matters, none of the defendants admitted or denied the SEC findings.

MainStory: TopStory AccountingAuditing FraudManipulation PublicCompanyReportingDisclosure SarbanesOxleyAct CaliforniaNews

Back to Top

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.