SEC Settles Accounting Fraud Suit With Xerox For $10M

Top management at Xerox Corp. led a four-year scheme to defraud investors by accelerating the recognition of $3 billion in revenue and inflating earnings by about $1.5 billion, the Securities and Exchange Commission said last week in settling a civil lawsuit against the company.

Xerox (XRX-NYSE) agreed to pay a $10 million fine and restate its financial results from 1997 to 2000 to settle the suit, brought last week. The commission charged Xerox with recognizing revenue on its office copier leases too early in their cycles, violating generally accepted accounting principles. A Xerox spokeswoman says the settlement doesn't confirm or deny the SEC's charges.

The SEC also reportedly served notices to former Xerox auditor KPMG LLP and to former Xerox executives, including chairman Paul Allaire, CFO Barry Romeril, and CEO Rick Thoman. The notices ask the executives to explain why they shouldn't be sued.