FMC Technologies Will Pay $2.5 Million To Settle SEC Charges

(RTTNews) - FMC Technologies Inc. (FTI) has agreed to pay a $2.5 million penalty to settle charges it overstated profits in one of its business segments, the U.S. Securities and Exchange Commission said Thursday.

Two former executives at the Houston-based technology solutions company have agreed to settle charges that they caused the violations to meet internal targets.

The SEC's order found that after being pressured to improve the financial performance of the energy infrastructure segment at FMC Technologies, the segment's then controller Jeffrey Favret and a business unit controller Steven Croft artificially reduced the value of a liability recorded by the company for employee paid time off.

These improper adjustments overstated the segment's pre-tax operating profits by $800,000, which enabled the business to meet an internal target for the first quarter of 2013, the SEC said.

In addition, Favret and Croft also corrected a $730,000 error recorded in 2012 that increased their segment's operating results for first quarter 2013, but did not inform the company's controller.

Later, the two signed management representation letters attesting they did not make out-of-period adjustments larger than $250,000 recorded during that period.

FMC Technologies, Favret and Croft consented to the SEC's order without admitting or denying the findings. 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.

"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," Stephanie Avakian, Deputy Director of the SEC's Division of Enforcement, said.

Favret and Croft, who no longer work at FMC Technologies, also agreed to suspensions from appearing or practicing before the SEC as accountants. This includes not participating in the financial reporting or audits of public companies. However, they can apply for reinstatement after two years.