Lucent Agrees to $25M SEC Penalty

And you thought the deal was done? Lucent reaches another settlement with the SEC

March 18, 2004

2 Min Read
Lucent Agrees to $25M SEC Penalty

File under: “Hey, I thought we were done with that!"

After the close of trading Wednesday, Lucent Technologies Inc. (NYSE: LU) said that once again it is this close to winding up an investigation of its accounting practices by the U.S. Securities and Exchange Commission (SEC). (See SEC Bills Lucent $25M.)

Now Lucent says it and the SEC staff investigating it have agreed that the company should pay the SEC a one-time penalty of $25 million for its accounting sins, without admitting guilt or wrongdoing.

Lucent can easily afford the tariff -- even though $25 million is about eight times CEO Pat Russo's 2003 bonus (see It's Christmas Time at Lucent). But the back-and-forth between Lucent and the SEC must be taking its toll.

Back in February 2003, Lucent announced it had almost reached a settlement with the Commission. Evidently something happened between then and now to pique the SEC staff because, back then, a cash penalty wasn’t discussed (see Lucent to Settle With SEC).

Now, Lucent has to fork over $25 million for its “lack of cooperation during the investigation and certain actions taken by the company subsequent to the agreement in principle,” according to Lucent’s statement issued Wednesday evening (see Lucent, SEC Reach Understanding).

Lucent will not be required to make any financial restatements as part of the settlement proposal.

This all harkens back to the SEC's investigation of an accounting mess that hit Lucent late in 2000, when an error came to light whereby Lucent overbooked $125 million in revenue (see Lucent Shares Hammered by $125M Goof). Less than two months later, Lucent took another battering when an audit found the problem was bigger than originally thought, and the company acknowledged an error (see LR Index: Dead in the Water , Lucent Starts Cleaning Up, and SEC Knocking on Lucent's Door).

Again, though, Lucent’s settlement -- and the proposed fine -- isn’t final. The full Commission still has to approve the penalty, so expect more noise on this in the days to come.

Lucent shares were trading up one penny (0.25%) to $3.94 in early trading Thursday.

— Phil Harvey, News Editor, Light Reading

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