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News > Companies
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SEC widens bogus sales probe
Agency investigating growing disclosure of false sales reports across many industries.
May 16, 2002: 10:04 AM EDT

NEW YORK (CNN/Money) - The Securities and Exchange Commission, worried about a variety of transactions that made it appear business was growing for many industries, is broadening its investigation into the ways companies boosted revenue, according to a report Thursday.

In addition to the inquiry into Global Crossing Ltd. and Qwest Communications International Inc. (Q: up $0.08 to $5.47, Research, Estimates) swapping fiber-optic capacity to increase revenue, officials at the SEC are also probing the role vendor financing played in Lucent Technologies Inc.'s sales, the Wall Street Journal said, citing people familiar with the matter.

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The investigation also extends far beyond the disclosures by Dynegy Inc. (DYN: down $0.45 to $7.90, Research, Estimates), Reliant Resources Inc. and CMS Energy Corp. that they engaged in illusory "swap" trades that boosted business.

"I don't want to say it's an epidemic, but we've seen enough problems that it concerns us. We need to hit this pretty hard," the report quoted Charles Niemeier, head of accounting of the SEC's Enforcement Division, as saying.

"Some companies were trying to give the appearance of economic activity when there was none," he told the newspaper.

The report said SEC officials are concerned that the explosion of transactions that falsely created the impression of booming business across a range of industries contributed to the stock market's huge rally in the late 1990s.  Top of page






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