Friday, 1 November 2013

SEC investigation into CSC’s accounting irregularities - are things becoming more serious for some individuals?


CSC had gone quiet about the SEC investigation into its accounting irregularities in Nordics, Australia and the Managed Services Sector. In fact things were so quiet that many people assumed the investigation had quietly come to a close.

Not at all!  
Bloomberg has today reported that certain CSC US and nonUS based employees have received Wells Notices. Fuller details on:
http://www.bloomberg.com/news/2013-10-31/csc-shares-tumble-after-employees-receive-wells-notices-from-sec.html?cmpid=street

Wells Notices are often a precursor of the SEC taking enforcement action, which may include legal proceedings, against a company and/or certain employees.

CSC disclosed in 2010 that accounting irregularities had been discovered in its Nordic Region. The amount involved eventually totaled over US$ 90 millionIt then announced further irregularities had been found in its Managed Services Sector and Australia.
The SEC announced an investigation into these irregularities, subsequent to which CSC’s Audit Committee announced an independent investigation of its own. Quite why it took CSC’s Audit Committee so many months and the announcement of anSEC investigation to investigate the irregularities is something we found puzzling.
Whatever the Wells Notices turn out to be the precursors of, it is unlikely to be good news for CSC or for the employees involved..

2 comments:

Anonymous said...

Having avoided accountability for their roles in the NHS write-offs and in the subsequent allegations of having fraudulently misled investors, it would be fitting if Laphen, Mancuso and Hains were amongst those receiving Wells notices. They created the environment where these accounting irregularities could happen at all, then go undetected for so long, so they should be held acountable for it.

But it is more likely to be some unfortunate Finance staff and middle management who have to again bear the consequences of the years of mismanagement at the top of CSC.

Anonymous said...

Reuters and Bloomberg reported on December 11 that CSC itself has now received a Wells Notice from the SEC, indicating that that SEC intends taking some form of action against the company.