Cutter & Buck Inc. has finalized its previously announced agreement with the Securities and Exchange Commission (SEC), resolving the Commission's investigation of the company. The agreement provides for Cutter & Buck to comply with the financial reporting, maintenance of books and records and internal control provisions of the federal securities laws. No fines or monetary penalties are required to be paid.
Last August, Cutter & Buck identified certain revenue recognition issues that it publicly disclosed and brought to the SEC's attention. “We self-reported this matter to the SEC in 2002, as soon as we discovered the problem,” said Fran Conley, the company's chief executive officer. “We had a responsibility to our shareholders and believed it was in the best interests of the company to fully cooperate with the SEC in its investigation. We know that the company's prompt action and cooperation with the SEC has been a significant factor in bringing this matter to a close.”
On June 17, 2003, the company announced it expected to reach agreement with the SEC to settle the investigation. The day before, Cutter & Buck announced an agreement with plaintiffs to settle the shareholder lawsuits relating to the restatement of financial results for fiscal years 2000 and 2001.
In a related story, the Department of Justice, FBI and the Securities and Exchange Commission announced Thursday that it had charged former Cutter & Buck executives with securities fraud in relation to the above mentioned activity.
CBUK's former CFO, Stephen Scott Lowber, pleaded guilty to a criminal felony charge of being an accessory to wire fraud after the fact. He faces a criminal penalty of up to 2.5 years in prison and up to three years' supervision after release, and a $125,000 fine. A sentencing date has not been set.
Lowber agreed to a $50,000 civil fine and an anti-fraud injunction in a separate SEC probe, without admitting or denying the SEC's findings. The SEC also barred Lowber from serving as an officer or director of a public company and he cannot appear before the SEC as an accountant.
Former CBUK regional sales vice president David Hilton, agreed to a $25,000 civil fine to settle SEC charges, without admitting or denying the findings.
The actions of the agencies appear to finally settle Cutter & Buck's outstanding issues and position it to move forward.
“Today's settlement with the SEC and the previously announced settlement of the shareholder lawsuits brings to conclusion the two most significant challenges that faced the company as a consequence of our earnings restatements,” said Conley. “We are pleased to put these issues behind us.”
Conley said that the company has fully cooperated with the SEC and will also be cooperating with the U.S. Department of Justice in its separate, ongoing investigation of the matter. “We have no reason to believe that either the company or any of its current directors, officers, managers or employees are targets of that investigation,” added Conley.
