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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23344 / September 11, 2015

Securities and Exchange Commission v. Wilfred Robert Sutcliffe, Civil Action No. 15-cv-4340 (RS) (S.D.N.Y.)

Securities and Exchange Commission v. Edward Parker, Civil Action No. 15-cv-4341 (ER) (S.D.N.Y.)

Securities and Exchange Commission v. Christopher Edwards, Civil Action No. 15-cv-4339 (RA) (S.D.N.Y.)

SEC Obtains Final Judgments Against Remaining Defendants in Computer Sciences Corporation Action

The Securities and Exchange Commission announced today the resolution of the three pending civil suits arising out of its June 5, 2015 action against Computer Sciences Corporation and eight of its former employees. On September 9, 2015, the Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York entered a final judgment against defendant Wilfred Robert Sutcliffe. Also on September 9, the Honorable Edgardo Ramos of the United States District Court for the Southern District of New York entered a final judgment against defendant Edward Parker. And on July 24, 2015, the Honorable Ronnie Abrams of the United States District Court for the Southern District of New York entered a final judgment against defendant Christopher Edwards. In each of these cases, the defendants agreed to be enjoined from violating the antifraud and other provisions of the federal securities laws and to be barred from serving as officers or directors of public companies to settle the SEC's charges. Sutcliffe and Parker, who received bonuses as a consequence of their misconduct, were also required to disgorge this compensation.

The SEC's Complaint against Sutcliffe alleged that he manipulated CSC's financial results related to the company's multi-billion dollar contract with the United Kingdom's National Health Service (NHS). Sutcliffe was CSC's finance director on the NHS contract at the time. The SEC alleged that after learning that CSC would lose money on the NHS contract, Sutcliffe added items to CSC's accounting models that artificially increased its profits but that had no basis in reality. This fraudulently overstated CSC's earnings by approximately $200 million in the second quarter of its fiscal year 2010.

The final judgment against Sutcliffe permanently enjoins him from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) and 13b2-1 thereunder, and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 13a-1 and 13a-13 thereunder. The final judgment also prohibits Sutcliffe from serving as an officer or director of any public company and orders him to pay disgorgement in the amount of $6,003.33, plus prejudgment interest thereon in the amount of $1,060.62. Sutcliffe consented to the entry of the final judgment without admitting or denying the allegations in the SEC's complaint. In his settlement offer, Sutcliffe also consented to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the SEC as an accountant.

In its Complaint against Parker, the SEC charged that he ignored basic accounting standards to increase CSC's profits. Parker was CSC Australia's Controller at the time. The SEC alleged that Parker, along with CSC's former regional CFO, overstated the company's earnings by using "cookie jar" reserves and failing to record expenses as required. This misconduct fraudulently overstated CSC's operating results by more than 5% in the first quarter of fiscal year 2009 and allowed the company to meet analysts' earnings targets during that period.

The final judgment against Parker permanently enjoins him from violating Securities Act Section 17(a) and Exchange Act Sections 10(b) and 13(b)(5) and Rules 10b-5(a) and (c) and 13b2-1 thereunder, and from aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) and Rules 13a-1 and 13a-13 thereunder. The final judgment also prohibits Parker for five years from serving as an officer or director of any public company and orders him to pay disgorgement in the amount of $2,800, plus prejudgment interest thereon in the amount of $750. Parker consented to the entry of the final judgment without admitting or denying the allegations in the SEC's complaint. In his settlement offer, Parker also consented to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the SEC as an accountant, with the right to apply for reinstatement after five years.

The SEC alleged that Edwards also ignored basic accounting standards to increase CSC's profits. Edwards was a finance manager in CSC's Nordic region at the time. The SEC's Complaint charged that Edwards recorded and maintained large amounts of "prepaid assets" that CSC was instead required to record as expenses. Edwards's actions resulted in CSC fraudulently overstating its consolidated operating income by 5% for the first quarter of fiscal year 2010, and in the company materially overstating the operating income of one of its reportable segments in each quarter of that fiscal year.

The final judgment against Edwards permanently enjoins him from violating Securities Act Sections 17(a)(1) and (3) and Exchange Act Sections 10(b) and 13(b)(5) and Rules 10b-5(a) and (c) and 13b2-1 thereunder, and from aiding and abetting violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder. In addition, the final judgment bars Edwards from serving as an officer or director of any public company for a period of four years. Edwards consented to the entry of the final judgment without admitting or denying the allegations in the SEC's complaint. In his settlement offer, Edwards also consented to the issuance of an administrative order pursuant to Rule 102(e) of the Commission's Rules of Practice, suspending him from appearing or practicing before the SEC as an accountant, with the right to apply for reinstatement after four years.

The SEC appreciates the assistance of the Australian Securities & Investments Commission.

For further information, see the SEC's June 5, 2015 Press Release in this matter.

 

http://www.sec.gov/litigation/litreleases/2015/lr23344.htm


Modified: 09/11/2015