Construction Company Fined for Overstating Net Earnings

A global construction services company settled charges with the SEC for "inaccurate books and records and materially misstated financial statements in periodic reports filed with the SEC."

In an Order, the SEC said that the company failed to account properly for losses on two fixed-price construction projects. The SEC found that the company materially overstated its net earnings and understated net losses in connection with one of the contracts, while delaying the recognition of losses for two quarters on the other contract. The SEC concluded that the company violated Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) ("Periodical and other reports") and Rules 13a-1 ("Requirements of annual reports"), 13a-13 ("Quarterly reports on Form 10-Q"), 13a-15(a) ("Controls and procedures") and 12b-20 ("Additional information") thereunder.

To settle the charges, the company agreed to (i) cease and desist from further violations and (ii) pay a civil money penalty of $14.5 million. Several officers and employees of the company agreed to settle related charges by paying fines ranging from $15,000 to $25,000 each.