Securities and Exchange Commission regulators said three former executives of outdoor apparel manufacturer North Face Inc have agreed to settle charges of accounting fraud related to allegations they inflated financial results.
The SEC had accused The North Faces former CFO, Christopher Crawford, and two ex-vice presidents, Todd Katz and Richard Tyrer, of overstating revenue and gross margins by fraudulently recognising revenue on barter transactions and recording consignment sales as completed regular sales during 1997 and 1998.
The agency also claimed the trio attempted to hide the true nature of the improperly reported transactions form North Face’s auditors and from a special audit committee investigation.
It said the three men have now settled with the SEC without admitting or denying any wrongdoing. Crawford agreed to give up about $28,980 in ill-gotten gains plus interest, and to pay a civil penalty of $30,000; Katz agreed to pay a civil penalty of $40,000; while Tyrer agreed to an order permanently barring him from further securities law violations.
The allegations relate to a period before North Face was bought by apparel giant VF Corp in 2000.