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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

opticalwatcher 12/5/2012 | 2:13:18 AM
re: Lucent Agrees to $25M SEC Penalty You can really tell a company's leadership when things like this happen. At Nortel, head rolled when they had to restate earnings. At least Lucent is agreeing to a fine, but are any heads on the block for their financial 'mistakes'?
technonerd 12/5/2012 | 2:13:10 AM
re: Lucent Agrees to $25M SEC Penalty I think I ought to go knock over a liquor store today. When the police come to my door, I will agree to return a portion of the money on the condition that I sign a consent decree in which I admit to no guilt but promise not to repeat whatever it is I didn't do.

Think they'll accept my offer?
flam 12/5/2012 | 2:13:10 AM
re: Lucent Agrees to $25M SEC Penalty You can really tell a company's leadership when things like this happen. At Nortel, head rolled when they had to restate earnings. At least Lucent is agreeing to a fine, but are any heads on the block for their financial 'mistakes'?

You obviously have't worked for Lucent - that's not what the way it's done there.

Mcginn is the probably the only Lucent executive to have got the boot. Russo'll just shrug it off as "the previous guy did it, and we fired him."

Lucent only throws workbees overboard.
WiserNow 12/5/2012 | 2:12:19 AM
re: Lucent Agrees to $25M SEC Penalty The interesting thing is that Lucent was dinged for lack of cooperation with the SEC. That happened on Pat's watch, not under McGinn or Schaat.

Heads should roll for that. But knowing Lucent, the heads that will be held accountable were the ones trying to institute change rather than those who played the political game.

Lucent is a stodgy company that is rife with cronyism of the worst sort. Their top people are thoroughly mediocre and they can't recognize talent if they see it. All they can see is the threat implied by anyone with a new idea.

Bitter? Yes. All the elderly folks who held LU stock as a blue chip investment were bilked. Those who passed their AT&T shares to their grandchildren to pay for their college eduction must be rolling in their graves, while their grandkids wait tables to pay for college.
flam 12/5/2012 | 2:12:17 AM
re: Lucent Agrees to $25M SEC Penalty Jim Brewington recently got tossed out of Mobility to take up a "special assignment."

His name cropped up in the Saudi affair as well.

Since Mcginn vanished a while back, Schacht is a current buddy of Russo's, Peterson's with Avaya; methinks that Brewington's gonna be the scapegoat.


technonerd 12/5/2012 | 2:12:16 AM
re: Lucent Agrees to $25M SEC Penalty The interesting thing is that Lucent was dinged for lack of cooperation with the SEC. That happened on Pat's watch, not under McGinn or Schaat.
Hmm. I wonder if any of them lied to the SEC, and if so why they weren't hauled in on criminal charges a la Martha Stewart. Wouldn't you like to have been a fly on that wall?!
reoptic 12/5/2012 | 2:12:03 AM
re: Lucent Agrees to $25M SEC Penalty This company continues to take hits for accounting issues and financial management. When will it end?
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