is on its way to putting its legal troubles in the rearview mirror.
The Holtsville, N.Y., electronics outfit agreed Thursday to pay $37 million to settle
Securities and Exchange Commission
accounting-fraud charges, and to issue $96 million in stock to settle shareholder class actions. The SEC also charged 11 former Symbol executives.
Meanwhile, seven former execs at the Long Island-based maker of handheld bar-code devices were arraigned Thursday in federal court. The government charges the men, including former CEO Tomo Razmilovic and former finance chief Ken Jaeggi, with taking part in a massive accounting fraud that inflated reported earnings by hundreds of millions.
The company neither admitted to nor denied the civil findings. The SEC's complaint alleged that from at least 1998 until early 2003, Symbol and the former execs engaged in "numerous fraudulent accounting practices and other misconduct" that had a cumulative net impact of over $230 million on Symbol's reported revenue.
"The scope and magnitude of the fraud at Symbol Technologies warrant the imposition of significant penalties -- not just against individual wrongdoers, but also against the company responsible for having created and fostered the environment in which the wrongdoing took place," said SEC enforcement chief Stephen Cutler. "And while the company ultimately did cooperate with the government -- and received credit for having done so -- its initial response to our investigation further harmed investors by delaying exposure of the fraud and allowing it to continue longer than it otherwise might have."
The news comes as the company seeks to make a fresh start with managers who replaced the officers now facing charges. Two years ago Symbol hired former
exec Bill Nuti to
lead a turnaround. Since then, the company has made modest progress in resuscitating its fallen stock, but Symbol shares remain far below their tech bubble-era highs.
Trading in Symbol stock was halted on the NYSE Thursday morning. The stock closed at $14.71 Wednesday.
Fans say Symbol has managed a remarkable transition from its signature bar-code reading products to the emerging wireless tagging technology known as radio frequency identification, or RFID. The company has made promising headway with its new RFID system by selling to some large retailers like
. Last month, the stock surged 15% in a day after a solid first-quarter earnings report.
In August 2002, the SEC launched an investigation into Symbol's accounting practices. Symbol was accused of so-called channel stuffing, which entails shipping unordered products to distributors and booking the transactions as sales. The company was also accused of misbooking patent costs and shenanigans with stock option exercises.
Last year, two former executives, Bob Asti and Bob Korkuc, pleaded guilty to securities fraud charges.
Korkuc, the company's former chief accounting officer, admitted last year that he schemed with other top executives to inflate the company's earnings to meet Wall Street estimates, the
The company has set aside $142 million to cover the costs of the settlements. Last month, executives said that based on information from external auditors, they don't believe they'll need to add to that pool.