BISYS pays $25m to settle SEC financial reporting charges

WASHNGTON DC – The Securities and Exchange Commission (SEC) has settled charges against the BISYS Group for financial reporting, books-and-records, and internal control provision violations.

The Commission's complaint alleges that from July 2000 through December 2003, former BISYS officers and employees engaged in a variety of improper accounting practices that resulted in an overstatement of the company's reported financial results for the fiscal years 2001, 2002, and 2003 by roughly $180 million.

The improper accounting practices were primarily based in the company's insurance services division, but also occurred in other divisions of the company. The SEC complaint alleges that the improper accounting practices were a product of a corporate focus by former management on meeting aggressive, short-term earnings targets and a lax internal control environment.

The SEC claims that BISYS received approximately $20 million in ill-gotten gains as a result of its issuance of convertible debt, stock and options at prices that were inflated as a result of its violations. The improper accounting practices within the insurance services division resulted in an overstatement of BISYS's reported pre-tax earnings by roughly $118 million for the fiscal years between 2001 and 2003. The improper accounting practices in BISYS's other divisions overstated the company's pre-tax earnings for the same period by an additional $60.9 million.

BISYS, a leading provider of financial products and support services, agreed to settle the case, without admitting or denying the Commission's allegations. The company consented to the judgment and agreed to pay approximately $25 million in disgorgement and prejudgment interest.