The Securities and Exchange Commission said Friday a federal court in Northern California approved a settlement with Steven Neil, the former chief financial officer of Diamond Foods, Inc.
The SEC charged Neil in January 2014 with financial accounting fraud at the California-based snack food company.
Neil settled the charges without admitting or denying the SEC’s allegations.
The court’s final judgment ordered Neil to pay a civil penalty of $125,000. He also agreed to forfeit stock and options Diamond awarded him worth about $1 million at current stock prices.
Neil was banned from serving as an officer or director of a public company for five years. And he agreed to be barred from practicing as an accountant before the SEC, with a right to reapply after 5 years.
According to the SEC’s complaint, Neil “directed an effort to fraudulently underreport money paid to walnut growers by delaying the recognition of related expenses into later fiscal periods.”
By manipulating walnut costs, the SEC said, Diamond reported higher net income and inflated earnings to exceed analysts’ estimates for fiscal quarters in 2010 and 2011.
Diamond had to restate its financial results in November 2012 to reflect the true cost of acquiring walnuts. That caused the company’s stock price to drop from $90 per share in 2011 to just $17 per share, the SEC said.
Diamond subsequently fired Neil.
The SEC’s Litigation Release No. 23192 dated February 6, 2015 in Securities and Exchange Commission v. Steven Neil, Civil Action No. 14-cv-122 WHA (N.D. Cal. filed Jan. 9, 2014) is here.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.