LAWFUEL -The Law News Network – Washington, D.C., Jan. 20, 2006 – On Jan. 6, 2006, the Securities and Exchange Commission asked the court overseeing its accounting fraud case against i2 Technologies, Inc. to authorize distribution of the $10 million civil penalty and disgorgement that i2 paid to settle the Commission’s charges. The Commission has asked the court to establish a Fair Fund under the Sarbanes-Oxley Act of 2002, to hold the civil penalty, disgorgement and accrued interest. The Commission has further requested that, after a tax administrator files any reports on the Fair Fund required by law, the Fair Fund be transferred to and joined for distribution with an approximate $85 million settlement fund previously established in the private securities class action against i2 arising from the same events. The Commission proposes that no part of the Fair Fund be used to pay the private class attorneys’ fees or the distribution agent’s fees.
Katherine Addleman, Associate District Administrator of the Commission’s Fort Worth office, commented, “We are pleased to return these funds to investors injured by i2’s wrongdoing, as contemplated by the Sarbanes-Oxley Act. We believe that distributing these funds through the existing private class action settlement fund is the most efficient way to do this under the circumstances of this case.”
In its civil suit and related administrative proceeding against i2, the Commission alleged that, for the four years ended Dec. 31, 2001, and the first three quarters of 2002, i2 misstated approximately $1 billion of software license revenues. As a result, i2’s periodic filings with the Commission and earnings releases during this period materially misrepresented i2’s revenues and earnings. The Commission further alleged that i2’s conduct violated the antifraud, reporting, record-keeping and internal controls provisions of the federal securities laws. In June 2004, i2 settled these charges without admitting or denying the Commission’s substantive findings or allegations. As part of that settlement, i2 paid a $10 million civil penalty and nominal $1 disgorgement. It also consented to a Commission order to cease-and-desist from such violations. See Litigation Rel. No. 18741 (June 9, 2004).
The court has granted the Commission’s request to publish notice of its proposal to distribute to injured investors. Investors injured by the wrongdoing alleged in the Commission’s complaint against i2 have until Feb. 17, 2006, to file written objections with the court and the Commission’s counsel. Investors should go to the Litigation Releases section of the Commission’s website (www.sec.gov) for more information.
The Commission’s case is styled SEC v. i2 Technologies, Inc., Civil Action No. 3:04-CV-1250, in the United States District Court for the Northern District of Texas (Dallas Division).List your legal jobs on the LawFuel Network