The Lucent Accounting Scandal


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Case Details:

Case Code : FINC039
Case Length : 14 Pages
Period : 1999 - 2004
Pub. Date : 2005
Teaching Note :Not Available
Organization : Lucent
Industry : Telecom
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts Contd...

The Result

Lucent and three individual defendants - William Plunkett, Deborah Harris and Vanessa Petrini - agreed to settle matters without admitting or denying the SEC allegations. In March 2004, Lucent agreed to pay a $25 mn fine, the largest fine ever levied by SEC against a company for refusing to co-operate.

SEC claimed that Lucent had failed to cooperate in its regulatory investigations. In addition, SEC claimed that Lucent's officials made statements that misled the public about its investigation. Apart from paying the fine, Lucent consented to the SEC judgement that charged it with violations of federal securities laws, poor internal control provisions & reporting and improper maintainance of books and records. Plunkett, Harris and Petrini too consented to a similar judgment and also to knowingly circumventing internal controls of the SEC and aiding and abetting violations of provisions of reporting, books and records and internal controls laid out in the federal securities laws (Refer Exhibit IV for relevant sections of the Securities Exchange Act, 1934 dealing with the said offenses)...

Exhibits

Exhibit I: Lucent's Stock Performance
Exhibit II: Lucent - Financial Statements (1999-2000)
Exhibit III: Lucent's Executives Involved in Accounting Fraud
Exhibit IV: Relevant Provisions of the Securities Exchange Act (1934)
Exhibit V: Lucent - Financial Statements (2001-03)

 

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