Washington, D.C., May 19, 2008 (Lawfuel) – The Securities and Exchange Commission today filed settled charges against Brooks Automation, Inc., alleging that the Chelmsford, Mass. semiconductor capital equipment company overstated its income and understated employee compensation expenses in its financial statements by $64.5 million during a 10-year period due to its failure to properly account for employee stock options.
The transactions alleged in the SEC’s complaint also were the subject of a separate enforcement action the Commission filed in 2007 against the company’s former President and CEO Robert J. Therrien. In that suit, the SEC alleges that Therrien received millions of dollars in undisclosed compensation by fraudulently backdating his exercise of an option to purchase company stock. Therrien also is alleged to have engaged in a broader fraudulent scheme from 1999 to 2001 to grant himself and other Brooks employees and executives undisclosed, in-the-money stock options.
“Investors have the right to complete and accurate information about the financial condition of public companies and the compensation their executives receive,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement. “Here, the alleged conduct of Brooks’ then-CEO resulted in its repeated reporting of incorrect financial information to the public.”
The SEC’s settlement with Brooks was based in part on the company’s swift, extensive, and extraordinary cooperation in the Commission’s investigation.
David Bergers, Director of the SEC’s Boston Regional Office, said, “Brooks’ cooperation greatly facilitated the government’s investigation.”
According to the SEC’s complaint against Brooks, filed in the District of Massachusetts, the backdating by Therrien and improper accounting by Brooks resulted in misleading disclosures from 1996 to 2005. Brooks overstated its net income by as much as 30 percent in fiscal year 2000 alone. Brooks misstated that all stock options were granted at or above the fair market value of the stock on the date of the award, when that was not the case. Brooks also filed misstated financial statements with the SEC in its annual and quarterly reports, failing to recognize compensation expense for the company’s stock option grants as required by generally accepted accounting principles.
Brooks, without admitting or denying the allegations in the SEC’s complaint, has agreed to settle the matter by consenting to a permanent injunction against violations of the reporting, books and records, and internal controls provisions of the federal securities laws.