* SEC said Huron accounted improperly for acquisitions
* $1 million fine assessed, no admission of wrongdoing
* Huron had been formed by Arthur Andersen alumni
By Jonathan Stempel
July 19 Huron Consulting Group Inc
agreed to pay a $1 million civil fine to settle U.S. regulatory
charges over a 2009 accounting scandal that caused its shares to
plunge and led to the replacement of its entire management team.
The settlement announced by the U.S. Securities and Exchange
Commission ended a three-year probe. It resolved charges that
the Chicago-based company overstated pretax income from 2005 to
early 2009 by failing to account for costs connected with its
acquisitions of four firms as compensation expenses.
Two former Huron executives, Chief Financial Officer Gary
Burge and Chief Accounting Officer Wayne Lipski, settled related
SEC accounting charges by agreeing to pay a respective $228,000
and $66,000 in fines, disgorgement and interest.
Huron shares plunged 69 percent in a single day, Aug. 3,
2009, when the company said it would restate more than three
years of results and said it senior management team would leave.
That announcement was particularly surprising given that
Huron had been founded just seven years earlier by 25 former
partners at Arthur Andersen, the Chicago-based auditor that
collapsed over its work for the energy company Enron Corp.
The SEC said Huron's restatement reduced net income from
2006 through the first quarter of 2009 by about $56 million.
"A substantial portion of the money it paid to acquire other
consulting firms was being used to retain professional talent,"
said Merri Jo Gillette, director of the SEC's Chicago regional
office. "Huron, Burge and Lipski should have known that their
flawed accounting gave investors a misleading impression of the
profitability of Huron's acquisitions."
None of the Huron defendants admitted or denied wrongdoing
in agreeing to settle with the SEC.
John McCartney, Huron's chairman, said the company believes
the settlement is in its best interest. Lawyers for Burge and
Lipski were not immediately available for comment.
In December 2010, Huron said it had reached a $38 million
settlement of shareholder litigation over the restatement, with
part of the sum to be paid by its insurers.
Shares of Huron closed Thursday down 14 cents at $32.68 on
the Nasdaq. They had traded at $44.35 before the accounting
problems came to light.