UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17016 \ May 23, 2001
ACCOUNTING AND AUDITING ENFORCEMENT
Securities and Exchange Commission v. Walter Königseder, Civil Action No. C-00-3668 (MJJ) (N.D. Cal. May 17, 2001)
COURT ENTERS DEFAULT JUDGMENT AND PERMANENTLY ENJOINS FORMER INFORMIX CORPORATION SENIOR MANAGER FROM VIOLATING ANTIFRAUD AND OTHER PROVISIONS
The United States District Court for the Northern District of California, on May 17, 2001, entered a default judgment and a final permanent injunction enjoining Walter Königseder ("Königseder"), formerly a Vice President of Informix Corporation ("Informix" or "Company") from violating or aiding and abetting violations of antifraud, reporting, record-keeping, and internal control provisions of the Securities Exchange Act of 1934 ("Exchange Act"). The Court granted the Securities and Exchange Commission ("Commission") all of the relief that the Commission sought in its October 5, 2000 Complaint against Königseder.
According to the Complaint, Königseder approved and ratified secret side letter agreements in connection with software license sales contracts that made revenue recognition on those contracts improper, and he approved and signed a purported contract that mischaracterized the underlying transaction so that revenue could be recognized prematurely. To inflate revenues and earnings further, Königseder directed the Company to enter into a phony software license sales contract. According to the Complaint, Königseder's misconduct caused the Company improperly to recognize approximately $25.5 million of revenue on six transactions and thus aided and abetted the Company's material overstatement of revenues and earnings for 1996 and the final three quarters of that year. Königseder subsequently signed a statement in which he lied about his knowledge of, and involvement in, the transactions for which revenue was recognized improperly.
Königseder is a citizen and resident of Germany. The Commission served him in Germany pursuant to the Hague Convention. When Königseder thereafter failed to respond to the Commission's Complaint, the Court entered the default judgment and the final permanent injunction enjoining Königseder from violating, or aiding and abetting violations of, sections 10(b), 13(a), 13(b)(2), and 13(b)(5) of the Exchange Act and Exchange Act rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1.
Previously, the Commission instituted and simultaneously settled an administrative proceeding against Informix. Informix Corp., Admin. Proc. No. 3-10130; SA Rel. No. 33-7788; SEA Rel. No. 34-42326; AAE Rel. No. 1215 (Jan. 11, 2000).
The Commission's investigation is continuing.