“Companies must accurately report their financial performance without regard to internal targets. Favret and Croft manipulated results to create the impression that the business was performing better than reality,” said Stephanie Avakian, Deputy Director of the SEC’s Division of Enforcement.
The SEC’s order also found that Croft failed to comply with internal accounting controls when he directed that his business unit switch to a new accounting system without taking reasonable steps to ensure that errors would not arise as a result. Errors did occur that overstated the segment’s results in two quarterly periods in 2014.
FMC Technologies also had another business unit that failed to properly account for employee paid time off, and the company improperly accounted for interest income associated with certain large intercompany loans, resulting in an $8 million out-of-period adjustment in 2014m SEC said.
FMC Technologies, Favret, and Croft consented to the SEC’s order without admitting or denying the findings, SEC said.
In addition to the $2.5 million penalty to be paid by FMC Technologies, Favret agreed to pay a $30,000 penalty and Croft agreed to pay a $10,000 penalty. Favret and Croft, who no longer work at FMC Technologies, also agreed to be suspended from appearing or practicing before the SEC as accountants, which includes not participating in the financial reporting or audits of public companies. The order permits them to apply for reinstatement after two years, SEC said.