The "tough" SEC "enforcement" at work:
Thursday July 18, 10:12 am Eastern Time
Reuters Company News
PNC settles with regulators, pays no fines
WASHINGTON, July 18 (Reuters) - U.S. federal regulators said on Thursday they reached settlements with PNC Financial Services Group Inc. (NYSE:PNC - News) over its use of accounting maneuvers to transfer $762 million in troubled assets off its balance sheet.
The Federal Reserve and the Securities and Exchange Commission made the announcement in a rare joint release.
"The Commission has issued a settled cease-and-desist order against PNC. This case is the Commission's first enforcement action resulting from a company's misuse of special purpose entities," the SEC said.
PNC, which is based in Pittsburgh, neither admitted nor denied the Commission's findings.
In its agreement with the Fed, PNC pledged to hire an outside consultant to review the oversight activities of PNC's board.
PNC said in a press release that it paid no fines and that no further adjustments to its financial statements were required.
"We're pleased to bring closure to this matter as a company," PNC President James Rohr said.
The settlements stem from three companies set up with American International Group in 2001 to receive $762 million in what the SEC called "volatile, troubled or underperforming loans and venture capital investments."
By not consolidating the three special purpose entities on its financial statements, the SEC said, PNC made "materially false and misleading disclosures" in press releases and quarterly reports filed with the SEC for the second and third quarters of 2001.
Under pressure from the Fed, PNC restated its results in January 2002 to reflect consolidated accounting treatment.
"Today's action demonstrates that the Commission will closely scrutinize transactions with special purpose entities," said Stephen M. Cutler, director of the SEC's division of enforcement.
The Fed has also been keeping an eye on the use of special purpose entities. In early February, Fed Governor Mark Olson said, "The Federal Reserve reserves the right to apply its own sound interpretation of those (generally accepted) accounting principles based on a careful consideration of the underlying facts and circumstances and the economic substance of the transactions."
PNC also said as a result of the settlements it will need prior approval from regulators to engage in new types of business or add new directors or senior executives.
biz.yahoo.com
What a joke. Watch out or you'll be "closely scrutinized" for fraud.
With LLoyd Cutler (relative of Stephen who is a former partner in Wilmer, Cutler & Pickering) representing Enron, the "scrutiny" is bound to be even more of a joke there. |
