SEC Seeks Monetary Penalty From Parmalat

The Securities and Exchange Commission on Monday filed suit against the embattled Italian food group Parmalat, saying the company misled investors while carrying out "one of the largest and most brazen corporate financial frauds in history."

The SEC asked a federal court to order the company "to pay a substantial civil monetary penalty" and enjoin it from committing further violations of security laws.

Separately, Italian prosecutors on Monday argued that the dairy company's founder was fully aware of a multibillion-dollar fraud, urging a judge to keep him behind bars during the investigation, the Associated Press reported.

Former Parmalat CEO Caliston Tanzi left the country last week after revelations of the huge hole in the company's balance sheet and the company's subsequent bankruptcy filing. The 65-year-old executive is being questioned in a Milan jail, the AP said.

Tanzi has admitted that he diverted funds from the global food group, according to Reuters.

Tanzi made the admission during questioning on Monday at Milan's San Vittore prison, lawyer Fabio Belloni told Reuters. "He admitted to diverting funds," Belloni said.