Nicor Inc. (GAS) Executives Charged with Fraud
To: Shareholders of Nicor Inc. (GAS)
We are currently investigating claims made against Nicor Inc. based on allegations that Nicor executives engaged in fraudulent activity. If you are a Nicor shareholder (GAS), you may contact us for further information.
WASHINGTON (AP) -- Federal regulators on Thursday charged three former Nicor Inc. executives with fraud, alleging that they schemed to manipulate earnings at the natural-gas distributor through fraudulent transactions.
The Securities and Exchange Commission filed civil-fraud charges against former Chief Executive Thomas Fisher, former Chief Financial Officer Kathleen Halloran, and former Treasurer George Behrens. The SEC said it is seeking to impose financial penalties and to bar the three from serving as officers or directors of public companies.
Fisher vowed to fight the charges, saying in a statement that "I look forward to demonstrating in court that I did not violate the securities laws in any way whatsoever." Lawyers for Halloran and Behrens said that the two former executives also would contest the allegations.
Four months ago, Nicor, which operates one of the largest U.S. natural gas distribution companies, agreed to pay $10 million to settle related civil charges. Nicor was accused of engaging in an accounting fraud when it shifted to a performance-based rate plan. Its former controller, Jeffrey Metz, also settled and agreed to pay more than $60,000.
Nicor was traditionally prevented from realizing returns from the sale of its natural-gas inventories under Illinois Commerce Commission regulations. Under that system, it had no incentive to tap into its lowest-price reserves, acquired many years earlier, because that would cause customer prices to drop and Nicor wouldn't get increased profit margins, the SEC said.
The SEC said that, in 1999, the three executives participated in devising a method by which Nicor could profit by accessing its low-cost last-in, first-out layers of gas inventory. As a result, the three engaged in, or approved, improper transactions, and made material misrepresentations in financial statements and documents filed with the SEC, regulators charged.
Source: Associated Press (2007)