Accounting & Tax

Three Depart amid Vitesse Options Probe

Semiconductor company has also expanded an internal investigation to review the revenue recognition policies and practices.
Stephen TaubMay 18, 2006

Vitesse Semiconductor has fired the three top executives it put on administrative leave just a month ago due to “issues related to the integrity of documents relating to Vitesse’s stock option grant process,” according to the company.

The individuals are chief executive officer Louis Tomasetta; executive vice president Eugene Hovanec, who previously served as chief financial officer; and current CFO Yatin Mody.

Acting CEO Christopher Gardner and acting CFO Shawn Hassel were named to those posts on a permanent basis.

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“This has been a very challenging time for the company,” said chairman John C. Lewis, in a statement. “We have taken quick and decisive action that we believe is in the best interests of the company and its shareholders.”

Vitesse added that it has expanded an internal investigation to review revenue recognition policies and practices, as well as other practices that may have affected the company’s cash position at the end of certain reporting periods.

The company also disclosed that it has received notice from Silicon Valley Bank that it is in default under its credit facility due to Vitesse’s failure to file its quarterly report for the quarter ended March 31, 2006, an apparent failure to meet liquidity covenants, alleged misrepresentations, and a material adverse change.

Vitesse, which has hired an investment bank to help obtain additional financing, also warned that if further financing cannot be obtained or the bank takes further action under the credit facility, “it would have a material adverse effect on the company’s operations, liquidity, and financial condition.”