Risk & Compliance

SEC Claws Back a CFO’s Bonus for Alleged Fraud at a Subsidiary

Clawbacks are becoming a more common mandate in SEC settlements. In the latest case, a finance chief will return $185,000 to his company.
Sarah JohnsonJanuary 30, 2012

Symmetry Medical CFO Fred Hite will pay back his company $185,000 after the Securities and Exchange Commission uncovered alleged fraud at the Indiana-based manufacturer’s British subsidiary. Hite will also pay a $25,000 penalty.

Hite is not accused of partaking in the alleged fraud; rather, the SEC says only that he did not provide the company’s audit committee with an internal-audit status report six years ago that would have raised issues about the problems at the subsidiary earlier than they were detected. His reimbursement to the company is yet another SEC citing of Section 304, the compensation clawback provision of the Sarbanes-Oxley Act.

Under the provision, executives must return bonuses and personal profits gained during the time a fraud occurred, even if they have done nothing wrong. Hite’s attorney did not respond to CFO’s request for comment as of press time.

Brian Moore, a former chief executive of the company, will also return $450,000. He earned that amount while working at Symmetry, which makes medical devices and aerospace products. He similarly is not accused of acting fraudulently.

In addition to the clawbacks, the SEC also announced Monday that it has accused four former senior executives and accountants at Symmetry subsidiary Thornton Precision Components (TPC) of an accounting scheme that materially affected three years’ worth of Symmetry’s financial statements.

The SEC alleges that the executives in Europe — vice president for European operations Richard J. Senior, finance director Matthew Bell, and controller Lynne Norman — made false certifications and lied to external auditors. Two auditors, who used to work for Ernst & Young LLP UK, have also been suspended for their “deficient audits” that, according to the SEC, failed to detect the fraud.