Case Study: SEC Complaint Against Nutracea

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SEC Complaint against NutraCea SEC Complaint against NutraCea Professional Research for Accountants August 24, 2014 SEC Complaint against NutraCea NutraCea is known for its manufacturing and selling of products which are related to health food. The SEC Complaint presented entailed matter about the entities sales and financial reporting of those sales. The main issue presented by the SEC was how the corporation falsified financial information as reported by Phoenix, Arizona based NutraCea and some of its accounting and senior management teams during the 2007 fiscal year. This complaint was filed directly by the SEC upon their realization that there had been an overstatement within the sales revenue for…show more content…
21819 Securities and Action No. CV 11-0092-PHX-DGC, where charges were formally brought forth against the senior management of the corporation. Prior to the indictment, the SEC formally charged NutraCea, two accounting personnel, and three executives for the unlawful engaging of fraudulent accounting in order to inflate the entities sales revenue. The corporations overstatement of sales revenue for both the 2nd and 3rd quarters of the 2007 fiscal year was done as a result of the corporation engaging in unethical activities of revenue recognition and by recording falsified sales. Those that were employed by NutraCea and were found guilty of engaging in improper activities and were charged by the SEC were former CEO Bradley David Edson, Secretary Todd C. Crow, Senior VP Margie Adelman, Director of Financial Services Scott Wilkinson and Controller Joanne D. Kline. The SEC complaint filed in the Federal District Court of Arizona stated that Adelman, Edson, and Crow falsified the sales revenues and Wilkinson and Kline practiced improper accounting practices by recording those false revenues. When presented with the allegations within the complaint they were neither confirmed or denied and instead chose to settle down the matter which can only be approved by the U. S. District Court of Arizona. The complaint against Crow was more extensive. It was alleged that he violated the Exchange Act Rule, antifraud financial reporting, records, and

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