SEC Press press_release 7 KB 4,005 chars

Former KPMG Partner Pays $100,000 to Settle SEC Litigation Relating to Xerox Audits

Release: 2005-144
Caption: Securities and Exchange Commission v. Honorable Denise L. Cote, et al.

summary

Former KPMG partner Joseph T. Boyle paid a $100,000 civil penalty and received a one-year suspension from practicing before the SEC for failing to report known improper accounting practices at Xerox Corp. during his tenure as relationship partner from 1999 to 2000, in violation of Section 10A of the Securities Exchange Act.

paragraph

Joseph T. Boyle, a former KPMG partner and relationship partner on Xerox’s audits from 1999 to 2000, agreed to pay a $100,000 civil penalty and accept a one-year suspension from appearing before the SEC to settle charges that he failed to report suspected illegal accounting practices. Despite being warned by the audit engagement partner that Xerox was engaging in improper accounting and that KPMG had a professional obligation to notify Xerox’s audit committee, Boyle took no action, violating Section 10A of the Securities Exchange Act of 1934. He consented to a permanent injunction against future violations without admitting or denying the SEC’s allegations.

narrative

Former KPMG partner Joseph T. Boyle agreed to pay a $100,000 civil penalty and accept a one-year suspension from practicing before the SEC to settle charges that he failed to report known improper accounting practices at Xerox Corp. during his tenure as relationship partner on its audits from 1999 to 2000. Despite being explicitly warned by the audit engagement partner that Xerox was engaged in illegal accounting and that KPMG had a professional obligation to notify the Xerox Audit Committee, Boyle took no action to escalate the concerns as required under Section 10A of the Securities Exchange Act of 1934. He consented to a permanent injunction against future violations of the reporting provisions without admitting or denying the SEC’s findings. Boyle, who retired from KPMG in 2003, was one of several KPMG partners implicated in the broader Xerox accounting fraud, which involved $6.4 billion in improper accounting. The SEC’s enforcement actions against KPMG, Xerox, and six former Xerox executives resulted in over $54 million in civil penalties and disgorgement. The SEC emphasized that relationship partners serve as critical gatekeepers in financial reporting and that failure to report suspected illegal acts undermines investor protections. Litigation against four other KPMG partners involved in the Xerox audits remained ongoing at the time of Boyle’s settlement.

Enriched metadata

Scheme: accounting-fraud (100%)
Court: Southern District of New York
Outcome: settled · 2005-10-06
Disgorgement: $54,000,000
Civil penalty: $100,000

Classified accounting-fraud(confidence 100%). EDGAR detection: forms 10-K/10-Q/8-K/NT 10-K· recall 80% / precision 48%. detection rule →

Extracted insights

Dollar amounts 3

$54.00M $54 million $10M–$100M
$100K $100,000 $100K–$1M
$100K $100,000 $100K–$1M

Entities 7

person honorable denise l. cote
person joseph t. boyle
company kpmg llp
agency sec as an accountant for one year
agency sec charges in connection with xerox audits
agency Securities and Exchange Commission
company xerox corp.

Triples 15

Joseph T. Boyle agreed to settle SEC charges in connection with Xerox audits
Joseph T. Boyle was partner at KPMG LLP
Joseph T. Boyle served as relationship partner for Xerox Corp. from 1999 through 2000
Joseph T. Boyle ordered to pay $100,000 civil penalty
Joseph T. Boyle permanently enjoined from violating Section 10A of the Securities Exchange Act of 1934
Joseph T. Boyle suspended from appearing or practicing before SEC as an accountant for one year
Joseph T. Boyle retired from KPMG in 2003
Joseph T. Boyle failed to report likely violations to Xerox Audit Committee
Xerox Corp. engaged in improper accounting during 1999 and 2000
KPMG LLP had obligation to communicate concerns to Xerox Audit Committee
SEC obtained civil penalties and disgorgement in excess of $54 million in Xerox actions
SEC announced settlement with KPMG LLP on April 19, 2005
SEC announced settlement with Xerox on April 11, 2002
SEC announced settlement with six former Xerox executives on June 5, 2003
Honorable Denise L. Cote subject to approve final judgment against Joseph T. Boyle

View original SEC press releasesec.gov

Extracted body text (4,005c)

FORMER KPMG PARTNER PAYS $100,000 TO SETTLE SEC LITIGATION RELATING TO XEROX AUDITS FOR IMMEDIATE RELEASE 2005-144 Washington, D.C., October 6, 2005 - The Securities and Exchange Commission announced that Joseph T. Boyle, a former partner with KPMG LLP, agreed to settle the SEC's charges against him in connection with his role as the relationship partner on the audits of Xerox Corp. from 1999 through 2000. Boyle consented to the entry of a final judgment in the SEC's civil litigation against him pending in the U.S. District Court for the Southern District of New York. The final judgment, which is subject to approval by the Honorable Denise L. Cote, orders Boyle to pay a civil penalty in the amount of $100,000, and also orders that Boyle be permanently enjoined from violating the provision of the federal securities laws that requires reporting of likely illegal acts to a company's audit committee, its board of directors and ultimately to the Commission (Section 10A of the Securities Exchange Act of 1934). Boyle also consented to the issuance of an SEC Order based on the entry of the injunction in the federal court action that will suspend him from appearing or practicing before the SEC as an accountant for a period of one year. Boyle consented to the entry of the injunction, penalty and SEC Order without admitting or denying the SEC's findings. "Auditors, including relationship partners, are gatekeepers who bear special responsibilities in the financial reporting process. Auditors who fail to perform those legal duties risk meaningful sanctions," said Linda Chatman Thomsen, the SEC's Director of the Division of Enforcement. "Relationship partners who act as the liaison to public companies' boards of directors play a critical role in ensuring that important information makes its way to the issuer," said Paul R. Berger, an Associate Director of Enforcement. "When the relationship partner, or any auditor, becomes aware of information indicating that an illegal act may have occurred, it is imperative that such information be immediately conveyed to the audit committee and, if necessary, the full board." As alleged in the SEC's federal court complaint, in the course of serving as the relationship partner for Xerox during 1999 and 2000, Boyle was told by the audit engagement partner that Xerox was engaged in improper accounting and that KPMG had a "professional obligation" to communicate these concerns to the Xerox Audit Committee. Despite these warnings, Boyle did not report these likely violations to the Xerox Audit Committee or take other steps required by Section 10A of the Exchange Act when Xerox management did not correct the violations. Boyle retired from KPMG in 2003. The SEC's civil fraud injunctive action against four other KPMG audit partners involved in the 1997 - 2000 Xerox audits is ongoing. See Litigation Release No. 17954 / January 29, 2003/Accounting and Auditing Enforcement Release No. 1709/ January 29, 2003; Litigation Release No. 18389 / October 3, 2003. In connection with the Xerox accounting fraud, the Commission previously announced settled enforcement proceedings against KPMG LLP, Xerox and six former senior executives of Xerox. See Litigation Release No. 19191 / April 19, 2005/Accounting and Auditing Enforcement Release No. 2235 / April 19, 2005 (KPMG LLP settlement); Litigation Release No. 17465 / April 11, 2002 / Accounting and Auditing Enforcement Release No. 1542 / April 11, 2002 (Xerox settlement); Litigation Release No. 18174 / June 5, 2003 / Accounting and Auditing Enforcement Release No. 1796 / June 5, 2003 (settlement of six former Xerox executives). The Commission obtained civil penalties and disgorgement in all of these actions in excess of $54 million. For further information contact: Paul R. Berger, Associate Director of Enforcement -- (202) 551-4910 James A. Kidney, Assistant Chief Litigation Counsel - (202) 551-4441 http://www.sec.gov/news/press/2005-144.htm Home | Previous Page Modified: 10/06/2005

OCR text (4,005c · plain-text · 99% conf)