Bankruptcy Judge OKs Delphi Settlement

CFO agrees to disgorge gains and pay a penalty.
Stephen TaubDecember 1, 2006

A federal bankruptcy judge has approved the settlement between the Securities and Exchange Commission and Delphi Corp. and six people — including its former chief financial officer — stemming from accounting fraud charges, according to the Associated Press.

Under the settlement, announced October 30, former finance chief Alan Dawes agreed to pay $687,000, consisting of disgorgement of $253,000 plus prejudgment interest of $134,000, and a penalty of $300,000. He also agreed to a five-year officer-and-director bar.

Delphi settled the charges without admitting or denying the commission’s allegations. It also will not be required to pay a penalty because it took “significant remedial steps and cooperated extensively with the Commission’s investigation,” according to Fredric D. Firestone, an associate director in the SEC’s Division of Enforcement, in a statement at the time of the settlement announcement.

Judge Robert Drain of the Southern District of New York called the settlement “fair and equitable” and in Delphi’s best interest, according to the AP. The SEC had charged Delphi, seven former company employees, and two others with participating in or aiding and abetting Delphi’s fraud. The group charged included J.T. Battenberg III, Delphi’s former chief executive officer and chairman of the board, who did not settle.

The complaint also charged four individuals with aiding and abetting Delphi’s reporting and books-and-records violations. The nation’s largest auto-parts supplier filed for bankruptcy protection in October 2005.