In re FLOWSERVE CORPORATION

CORRECTED 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 51427 / March 24, 2005 
 
ADMINISTRATIVE PROCEEDING  
File No. 3-11872 
 
 
In the Matter of 
 
FLOWSERVE CORPORATION, 
C. SCOTT GREER, and  
MICHAEL CONLEY, 
 
Respondents. 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS, MAKING 
FINDINGS, AND IMPOSING A CEASE-AND-
DESIST ORDER PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934  
 
 
I. 
 
 The Securities and Exchange Commission ("Commission") deems it appropriate that cease-
and-desist  proceedings  be,  and  hereby  are,  instituted  pursuant  to  Section  21C  of  the  Securities  
Exchange  Act  of  1934  ("Exchange  Act"),  against  Flowserve  Corporation,  C.  Scott  Greer,  and  
Michael Conley (collectively "Respondents").
1
  
 
II. 
 
  In  anticipation  of  the  institution  of  these  proceedings,  the  Respondents  have  submitted  
Offers  of  Settlement  (the  "Offers"),  which  the  Commission  has  determined  to  accept.    Solely  for  
the  purpose  of  these  proceedings  and  any  other  proceedings  brought  by  or  on  behalf  of  the  
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein,  except  as  to  the  Commission’s  jurisdiction  over  each  of  them  and  the  subject  matter  of  
these proceedings, the Respondents consent to the entry of this Order Instituting Cease-and-Desist 
Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of 
the Securities Exchange Act of 1934 ("Order"), as set forth below.   
                                                
 
1
    In  addition,  the  Commission  has  contemporaneously  filed  a  complaint  in  the  United  States  District  Court  
for  the  District  of  Columbia  charging  Flowserve  with  violating,  and  charging  Greer  with  aiding  and  abetting  
Flowserve’s  violations  of,  Exchange  Act  Section  13(a)  and  Regulation  FD  and  seeking  civil  penalties.  Without  
admitting or denying the Commission's allegations, the Defendants have consented to the entry of a final judgment 
by the Court that would require Flowserve to pay a $350,000 civil penalty and Greer to pay a $50,000 civil penalty. 
See  SEC  v.  Flowserve  Corporation  and  C.  Scott  Greer,  Case  No.  1:05CV00612  (D.D.C.)  (filed  March  24,  2005),  
Lit. Rel. No. 19154 (March 24, 2005). 

 
2
 
III. 
 
FACTS 
 
 On the basis of this Order and the Respondents’ Offers, the Commission finds that:  
 
            A.            
Respondents
 
Flowserve  Corporation  (“Flowserve”  or  the  “Company”)  is  a  New  York  manufacturer  of  
precision-engineered  flow  control  equipment,  headquartered  in  Irving,  Texas.    The  Company’s  
common  stock  is  registered  with  the  Commission  pursuant  to  Exchange  Act  Section  12(b)  and  
trades on the New York Stock Exchange. 
 
C. Scott Greer (“Greer”), age 54, is currently a Texas resident.  Greer has been Flowserve’s 
President since 1999, and Flowserve’s CEO and Chairman of the Board since 2000.  
 
Michael   Conley   (“Conley”),   age   50,   is   currently   a   resident   of   Texas.      Conley   is   
Flowserve’s  Director  of  Investor  Relations.    Conley  was  the  principal  author  of  Flowserve’s  
Regulation FD policy.  At all relevant times, Conley has been, and remains, the person responsible 
for its implementation.  
    
            B.            
Summary
 
On November 19, 2002, Flowserve’s Chairman, Chief Executive Officer, and President, C. 
Scott Greer, along with Flowserve’s Director of Investor Relations, Michael Conley, met privately 
in  Irving,  Texas  with  analysts  from  four  investment  and  brokerage  firms.    During  the  meeting,  
Greer,  with  Conley  present,  reaffirmed  the  Company’s  previously-disclosed  full  2002  earnings  
guidance and provided additional material nonpublic information to these analysts.   
 
Late  on  November  20,  2002,  one  of  the  analysts  released  a  report  that  highlighted  
Flowserve’s  reaffirmation  of  its  earnings  guidance  and  electronically  distributed  it  to  Thomson  
Financial  subscribers  of  First  Call.    The  next  day,  on  November  21st,  Flowserve’s  closing  stock  
price was approximately 6% higher than the closing price the day before.  In addition, the trading 
volume of Flowserve’s stock increased by 75%, from 379,500 shares traded on November 20th to 
658,300 shares traded on November 21st.  After the market closed on November 21st, Flowserve 
furnished a Form 8-K admitting that it had selectively disclosed information to analysts.  
 
C. 
Background
 
Since  as  early  as  1999,  Flowserve  has  had  a  disclosure  policy.    The  2001  version  of  the  
policy  mandated  a  specific  response  to  questions  regarding  earnings  guidance.    Subsequent  to  a  
public  announcement  of  earnings  and  other  guidance,  if  asked  about  the  Company’s  level  of  
“comfort”  with  the  guidance,  Company  spokespersons  were  to  respond  in  the  following  manner:  
“Although  business  conditions  are  subject  to  change,  in  accordance  with  Flowserve’s  policy,  the  

 
3
current  earnings  guidance  was  effective  at  the  date  given  and  is  not  being  updated  until  the  
company  publicly  announces  updated  guidance.”    This  policy  was  in  effect  throughout  2001  and  
2002.   
 
Flowserve,  a  calendar-year  reporting  corporation,  began  2002  forecasting  annual  earnings  
per share in the range of $1.90 to $2.30.  In July of that year, the Company revised that estimate to 
$1.70 to $1.90 per share.  On September 27th, the Company lowered its earnings estimate to $1.45 
to $1.55 per share, which the Company reaffirmed in its press release issued on October 22, 2002.  
The  $1.45  to  $1.55  range  represented  more  than  a  30%  decline  in  earnings  per  share  estimates  
since the beginning of the year.         
 
On  November  18th  and  19th,  2002,  Flowserve  hosted  a  private  analyst  event  in  Irving,  
Texas,  including  a  private  meeting  with  Flowserve  executives  and  a  plant  tour  on  the  19th.    
Analysts from four investment and brokerage firms attended the event.  Prior to the meeting on the 
19th, Conley did not caution the analysts as to what topics were off limits for the purposes of their 
discussions with Greer.    
   
On  the  morning  of  November  19th,  forty-two  days  before  the  end  of  Flowserve’s  fiscal  
year, the analysts met with Greer and Conley; Flowserve’s CFO, joined the meeting later.  During 
the  meeting,  the  attendees  discussed  various  aspects  of  Flowserve’s  business,  including  recent  
acquisitions, debt covenants, and free cash flow.  At one point, one of the analysts asked about the 
Company’s earnings guidance for the year.  Neither Conley nor Greer gave the response required 
by the Company’s policy that earnings guidance was effective at the date given and would not be 
updated  until  the  company  publicly  announced  updated  guidance.    Conley  did  not  caution  Greer  
before Greer answered the analyst’s questions.  In fact, Conley remained altogether silent.  Instead, 
in  response  to  the  question,  Greer  reaffirmed  the  previous  guidance,  which  had  been  issued  on  
October 22nd and provided additional material nonpublic information.  Having heard the exchange 
between  Greer  and  the  analyst,  again  Conley  was  silent  and  did  nothing  to  explain  Greer’s  
statements.  Conley also failed to reiterate the Company policy as to earnings guidance.   
 
The  following  day,  on  November  20th,  an  analyst  who  attended  the  meeting  issued  a  
report  to  the  investment  firm’s  subscribers  stating  that  Flowserve  reaffirmed  its  earnings  
guidance.    The  analyst’s  report  lists  the  reaffirmation  as  the  second  of  its  five  “Key  Points”  on  
the  Company.    In  addition,  the  reaffirmation  is  the  subject  of  the  first  substantive  paragraph  in  
the  section  of  the  report  entitled  “Discussion.”    The  report  was  electronically  distributed  to  
subscribers of Thomson’s First Call.  Conley read the analyst’s report the next day. 
 
On November 21st, Flowserve’s closing stock price was approximately 6% higher than the 
closing price the day before.  In fact, the greatest differential in Flowserve’s stock price was nearly 
9%, from a low of $13.33 on November 20th to a high of $14.50 on November 21st.  In addition, 
the  trading  volume  of  Flowserve’s  stock  increased  by  75%,  from  379,500  shares  traded  on  
November  20th  to  658,300  shares  traded  on  November  21st,  after  the  dissemination  of  the  
analyst’s report.   
 

 
4
                                                
 After the market closed on the 21st, Flowserve furnished a Form 8-K stating that earlier 
in  the  week,  the  Company  met  with  analysts  and  reaffirmed  its  full-year  earnings  estimates.
2
  
The Form 8-K reads: 
 
During   a   conversation   this   week   with   securities   analysts,   Flowserve   
Corporation  reaffirmed  its  full  year  2002  estimated  earnings  per  share,  
excluding  special  items,  in  the  range  of  $1.45  to  $1.55,  based  on  average  
outstanding   shares   of   approximately   52.5   million.   The   company   also   
reiterated  that  it  is  not  comfortable  at  this  point  projecting  more  than  
marginal  earnings  improvement  in  2003,  unless  markets  start  to  improve.  
The company went on to say that it believes its markets will improve.   
 
The  next  day,  Flowserve’s  stock  closed  at  $14.30,  the  same  closing  price  as  the  day  before,  and  
trading  volume  decreased  by  nearly  25%,  from  658,300  shares  traded  on  November  21st  to  
497,900 shares traded on November 22nd. 
 
IV. 
 
LEGAL ANALYSIS 
  
 Flowserve’s Primary Violation of Regulation FD and Exchange Act Section 13(a) 
 
Regulation  FD  prohibits  an  issuer,  or  persons  acting  on  its  behalf,  from  selectively  
disclosing  material,  nonpublic  information  to  certain  persons  outside  the  issuer.  Regulation  FD  
identifies those outside persons as: (1) broker-dealers and their associated persons; (2) investment 
advisers,  certain  institutional  investment  managers,  and  their  associated  persons;  (3)  investment  
companies,  hedge  funds,  and  their  affiliated  persons;  and  (4)  any  holder  of  the  issuer’s  securities  
under  circumstances  where  it  is  reasonably  foreseeable  that  such  a  person  would  purchase  or  sell  
securities on the basis of the information.   
 
Regulation   FD   distinguishes   between   “intentional”   selective   disclosures   and   “non-
intentional” selective disclosures.  A selective disclosure is “intentional” when the person making 
the  disclosure  knows,  or  is  reckless  in  not  knowing,  that  the  information  being  communicated  is  
both “material” and “nonpublic.”  Information is material if there is a substantial likelihood that a 
reasonable investor would consider the information important in making an investment decision or 
if  the  information  would  significantly  alter  the  total  mix  of  available  information.  Information  is  
nonpublic if it has not been disseminated in a manner making it available to investors generally.  
 
When an issuer, or person acting on its behalf, discloses material, nonpublic information to 
outside persons, Regulation FD requires public disclosure of that information by the issuer.  Issuers 
can make public disclosure for purposes of Regulation FD by filing or furnishing a Form 8-K, or 
by  disseminating  information  through  another  method,  or  combination  of  methods,  of  disclosure  
 
2
  The Form 8-K was furnished on November 21, 2002, at 5:16:43p.m.  This is more than 53 hours after the 
actual selective disclosure and nearly 26 hours after dissemination of the analyst’s report.   
 

 
5
                                                
that  is  reasonably  designed  to  provide  broad,  non-exclusionary  distribution  of  the  information  to  
the  public.    As  a  general  matter,  acceptable  methods  of  public  disclosure  for  purposes  of  
Regulation  FD  will  include  press  releases  distributed  through  a  widely  circulated  news  or  wire  
service,  or  announcements  made  through  press  conferences  or  conference  calls  that  interested  
members  of  the  public  may  attend  or  listen  to  either  in  person,  by  telephonic  transmission,  or  by  
other electronic transmission (including use of the Internet). 
 
Section  13(a)  of  the  Exchange  Act  requires  issuers  of  securities  registered  under  Section  
12(b)  to  file  with  the  Commission  certain  reports  and  other  information,  including  Form  8-K  
filings.    Thus,  if  an  issuer  fails  to  comply  with  Regulation  FD,  that  issuer  would  also  violate  
Section 13(a).
 
 
As  described  above,  Flowserve  Corporation,  through  its  CEO,  Greer,  intentionally  and  
selectively  disclosed  material,  nonpublic  information  to  securities  market  professionals  when,  on  
November 19th, 2002, Greer disclosed Flowserve’s continued confidence in its earnings guidance 
during  a  private  meeting  with  select  analysts.    As  a  result  of  the  facts  described  above,  the  
Commission   finds   that   Flowserve   violated,   and   Greer   and   Conley   were   each   a   cause   of   
Flowserve’s violations of, Exchange Act Section 13(a) and Regulation FD.
3
              
V. 
 
In view of the foregoing, the Commission deems it appropriate to accept the Respondents’ 
respective Offers and to impose the sanctions specified therein. 
 
 Accordingly, it is hereby ORDERED: 
 
  Pursuant  to  Section  21C  of  the Exchange Act, that Respondent Flowserve cease and desist 
from committing or causing any violations and any future violations of Exchange Act Section 13(a) 
and Regulation FD, and that Respondents C. Scott Greer and Michael Conley each cease and desist 
from  causing  any  violations  and  any  future  violations  of  Exchange  Act  Section  13(a)  and  
Regulation FD. 
 
            By            the            Commission.            
 
 
      Jonathan G. Katz 
                                                                        Secretary            
 
 
 
3
  In  addition  to  the  underlying  conduct,  the  Commission  considered  the  Respondents’  lack  of  cooperation  
afforded  the  Commission  staff.    Specifically,  both  Greer  and  Conley  denied  that  a  reaffirmation  occurred  at  the  
meeting, which is inconsistent with the Form 8-K. 
 

CORRECTED 
UNITED STATES OF AMERICA 

Before the 
SECURITIES AND EXCHANGE COMMISSION 

 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 51427 / March 24, 2005 
 
ADMINISTRATIVE PROCEEDING  
File No. 3-11872 
 
 
In the Matter of 
 
FLOWSERVE CORPORATION, 
C. SCOTT GREER, and  
MICHAEL CONLEY, 
 
Respondents. 
 

 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS, MAKING 
FINDINGS, AND IMPOSING A CEASE-AND-
DESIST ORDER PURSUANT TO SECTION 
21C OF THE SECURITIES EXCHANGE ACT 
OF 1934  

 
 

I. 
 
 The Securities and Exchange Commission ("Commission") deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 
Exchange Act of 1934 ("Exchange Act"), against Flowserve Corporation, C. Scott Greer, and 
Michael Conley (collectively "Respondents").1  

 
II. 

 
 In anticipation of the institution of these proceedings, the Respondents have submitted 
Offers of Settlement (the "Offers"), which the Commission has determined to accept.  Solely for 
the purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over each of them and the subject matter of 
these proceedings, the Respondents consent to the entry of this Order Instituting Cease-and-Desist 
Proceedings, Making Findings, and Imposing a Cease-and-Desist Order Pursuant to Section 21C of 
the Securities Exchange Act of 1934 ("Order"), as set forth below.   
                                                 
1  In addition, the Commission has contemporaneously filed a complaint in the United States District Court 
for the District of Columbia charging Flowserve with violating, and charging Greer with aiding and abetting 
Flowserve’s violations of, Exchange Act Section 13(a) and Regulation FD and seeking civil penalties. Without 
admitting or denying the Commission's allegations, the Defendants have consented to the entry of a final judgment 
by the Court that would require Flowserve to pay a $350,000 civil penalty and Greer to pay a $50,000 civil penalty. 
See SEC v. Flowserve Corporation and C. Scott Greer, Case No. 1:05CV00612 (D.D.C.) (filed March 24, 2005), 
Lit. Rel. No. 19154 (March 24, 2005). 



 2

 
III. 

 
FACTS 

 
 On the basis of this Order and the Respondents’ Offers, the Commission finds that:  
 
 A. Respondents
 

Flowserve Corporation (“Flowserve” or the “Company”) is a New York manufacturer of 
precision-engineered flow control equipment, headquartered in Irving, Texas.  The Company’s 
common stock is registered with the Commission pursuant to Exchange Act Section 12(b) and 
trades on the New York Stock Exchange. 
 

C. Scott Greer (“Greer”), age 54, is currently a Texas resident.  Greer has been Flowserve’s 
President since 1999, and Flowserve’s CEO and Chairman of the Board since 2000.  
 

Michael Conley (“Conley”), age 50, is currently a resident of Texas.  Conley is 
Flowserve’s Director of Investor Relations.  Conley was the principal author of Flowserve’s 
Regulation FD policy.  At all relevant times, Conley has been, and remains, the person responsible 
for its implementation.  

    
 B. Summary

 
On November 19, 2002, Flowserve’s Chairman, Chief Executive Officer, and President, C. 

Scott Greer, along with Flowserve’s Director of Investor Relations, Michael Conley, met privately 
in Irving, Texas with analysts from four investment and brokerage firms.  During the meeting, 
Greer, with Conley present, reaffirmed the Company’s previously-disclosed full 2002 earnings 
guidance and provided additional material nonpublic information to these analysts.   

 
Late on November 20, 2002, one of the analysts released a report that highlighted 

Flowserve’s reaffirmation of its earnings guidance and electronically distributed it to Thomson 
Financial subscribers of First Call.  The next day, on November 21st, Flowserve’s closing stock 
price was approximately 6% higher than the closing price the day before.  In addition, the trading 
volume of Flowserve’s stock increased by 75%, from 379,500 shares traded on November 20th to 
658,300 shares traded on November 21st.  After the market closed on November 21st, Flowserve 
furnished a Form 8-K admitting that it had selectively disclosed information to analysts.  

 
C. Background
 
Since as early as 1999, Flowserve has had a disclosure policy.  The 2001 version of the 

policy mandated a specific response to questions regarding earnings guidance.  Subsequent to a 
public announcement of earnings and other guidance, if asked about the Company’s level of 
“comfort” with the guidance, Company spokespersons were to respond in the following manner: 
“Although business conditions are subject to change, in accordance with Flowserve’s policy, the 



 3

current earnings guidance was effective at the date given and is not being updated until the 
company publicly announces updated guidance.”  This policy was in effect throughout 2001 and 
2002.   
 

Flowserve, a calendar-year reporting corporation, began 2002 forecasting annual earnings 
per share in the range of $1.90 to $2.30.  In July of that year, the Company revised that estimate to 
$1.70 to $1.90 per share.  On September 27th, the Company lowered its earnings estimate to $1.45 
to $1.55 per share, which the Company reaffirmed in its press release issued on October 22, 2002.  
The $1.45 to $1.55 range represented more than a 30% decline in earnings per share estimates 
since the beginning of the year.         

 
On November 18th and 19th, 2002, Flowserve hosted a private analyst event in Irving, 

Texas, including a private meeting with Flowserve executives and a plant tour on the 19th.  
Analysts from four investment and brokerage firms attended the event.  Prior to the meeting on the 
19th, Conley did not caution the analysts as to what topics were off limits for the purposes of their 
discussions with Greer.    
   

On the morning of November 19th, forty-two days before the end of Flowserve’s fiscal 
year, the analysts met with Greer and Conley; Flowserve’s CFO, joined the meeting later.  During 
the meeting, the attendees discussed various aspects of Flowserve’s business, including recent 
acquisitions, debt covenants, and free cash flow.  At one point, one of the analysts asked about the 
Company’s earnings guidance for the year.  Neither Conley nor Greer gave the response required 
by the Company’s policy that earnings guidance was effective at the date given and would not be 
updated until the company publicly announced updated guidance.  Conley did not caution Greer 
before Greer answered the analyst’s questions.  In fact, Conley remained altogether silent.  Instead, 
in response to the question, Greer reaffirmed the previous guidance, which had been issued on 
October 22nd and provided additional material nonpublic information.  Having heard the exchange 
between Greer and the analyst, again Conley was silent and did nothing to explain Greer’s 
statements.  Conley also failed to reiterate the Company policy as to earnings guidance.   

 
The following day, on November 20th, an analyst who attended the meeting issued a 

report to the investment firm’s subscribers stating that Flowserve reaffirmed its earnings 
guidance.  The analyst’s report lists the reaffirmation as the second of its five “Key Points” on 
the Company.  In addition, the reaffirmation is the subject of the first substantive paragraph in 
the section of the report entitled “Discussion.”  The report was electronically distributed to 
subscribers of Thomson’s First Call.  Conley read the analyst’s report the next day. 
 

On November 21st, Flowserve’s closing stock price was approximately 6% higher than the 
closing price the day before.  In fact, the greatest differential in Flowserve’s stock price was nearly 
9%, from a low of $13.33 on November 20th to a high of $14.50 on November 21st.  In addition, 
the trading volume of Flowserve’s stock increased by 75%, from 379,500 shares traded on 
November 20th to 658,300 shares traded on November 21st, after the dissemination of the 
analyst’s report.   

 



 4

                                                

 After the market closed on the 21st, Flowserve furnished a Form 8-K stating that earlier 
in the week, the Company met with analysts and reaffirmed its full-year earnings estimates.2  
The Form 8-K reads: 
 

During a conversation this week with securities analysts, Flowserve 
Corporation reaffirmed its full year 2002 estimated earnings per share, 
excluding special items, in the range of $1.45 to $1.55, based on average 
outstanding shares of approximately 52.5 million. The company also 
reiterated that it is not comfortable at this point projecting more than 
marginal earnings improvement in 2003, unless markets start to improve. 
The company went on to say that it believes its markets will improve.   
 

The next day, Flowserve’s stock closed at $14.30, the same closing price as the day before, and 
trading volume decreased by nearly 25%, from 658,300 shares traded on November 21st to 
497,900 shares traded on November 22nd. 

 
IV. 

 
LEGAL ANALYSIS 

  
 Flowserve’s Primary Violation of Regulation FD and Exchange Act Section 13(a) 

 
Regulation FD prohibits an issuer, or persons acting on its behalf, from selectively 

disclosing material, nonpublic information to certain persons outside the issuer. Regulation FD 
identifies those outside persons as: (1) broker-dealers and their associated persons; (2) investment 
advisers, certain institutional investment managers, and their associated persons; (3) investment 
companies, hedge funds, and their affiliated persons; and (4) any holder of the issuer’s securities 
under circumstances where it is reasonably foreseeable that such a person would purchase or sell 
securities on the basis of the information.   

 
Regulation FD distinguishes between “intentional” selective disclosures and “non-

intentional” selective disclosures.  A selective disclosure is “intentional” when the person making 
the disclosure knows, or is reckless in not knowing, that the information being communicated is 
both “material” and “nonpublic.”  Information is material if there is a substantial likelihood that a 
reasonable investor would consider the information important in making an investment decision or 
if the information would significantly alter the total mix of available information. Information is 
nonpublic if it has not been disseminated in a manner making it available to investors generally.  

 
When an issuer, or person acting on its behalf, discloses material, nonpublic information to 

outside persons, Regulation FD requires public disclosure of that information by the issuer.  Issuers 
can make public disclosure for purposes of Regulation FD by filing or furnishing a Form 8-K, or 
by disseminating information through another method, or combination of methods, of disclosure 

 
2  The Form 8-K was furnished on November 21, 2002, at 5:16:43p.m.  This is more than 53 hours after the 
actual selective disclosure and nearly 26 hours after dissemination of the analyst’s report.   
 



 5

                                                

that is reasonably designed to provide broad, non-exclusionary distribution of the information to 
the public.  As a general matter, acceptable methods of public disclosure for purposes of 
Regulation FD will include press releases distributed through a widely circulated news or wire 
service, or announcements made through press conferences or conference calls that interested 
members of the public may attend or listen to either in person, by telephonic transmission, or by 
other electronic transmission (including use of the Internet). 

 
Section 13(a) of the Exchange Act requires issuers of securities registered under Section 

12(b) to file with the Commission certain reports and other information, including Form 8-K 
filings.  Thus, if an issuer fails to comply with Regulation FD, that issuer would also violate 
Section 13(a). 

 
As described above, Flowserve Corporation, through its CEO, Greer, intentionally and 

selectively disclosed material, nonpublic information to securities market professionals when, on 
November 19th, 2002, Greer disclosed Flowserve’s continued confidence in its earnings guidance 
during a private meeting with select analysts.  As a result of the facts described above, the 
Commission finds that Flowserve violated, and Greer and Conley were each a cause of 
Flowserve’s violations of, Exchange Act Section 13(a) and Regulation FD.3
              

V. 
 

In view of the foregoing, the Commission deems it appropriate to accept the Respondents’ 
respective Offers and to impose the sanctions specified therein. 
 
 Accordingly, it is hereby ORDERED: 
 
 Pursuant to Section 21C of the Exchange Act, that Respondent Flowserve cease and desist 
from committing or causing any violations and any future violations of Exchange Act Section 13(a) 
and Regulation FD, and that Respondents C. Scott Greer and Michael Conley each cease and desist 
from causing any violations and any future violations of Exchange Act Section 13(a) and 
Regulation FD. 
 
 By the Commission. 
 
 
      Jonathan G. Katz 
      Secretary 
 
 

 
3  In addition to the underlying conduct, the Commission considered the Respondents’ lack of cooperation 
afforded the Commission staff.  Specifically, both Greer and Conley denied that a reaffirmation occurred at the 
meeting, which is inconsistent with the Form 8-K. 
 


	UNITED STATES OF AMERICA
	SECURITIES AND EXCHANGE COMMISSION
	In the Matter of
	FLOWSERVE CORPORATION,
	Respondents.



	FACTS
	A. Respondents
	C. Background

	Flowserve’s Primary Violation of Regulation FD and Exchange