Securities Law Blog

Brooks Automation Inc. settled Securities and Exchange Commission charges in the U.S. District Court for the District of Massachusetts May 19, 2008 accusing it of improperly accounting for employee stock options, resulting in an overstatement of income and understatement of employee compensation by more than $64 million over 10 years, the SEC announced (SEC v. Brooks Automation Inc., D. Mass., No. 08-CV-10834, 5/19/08). Brooks, a semiconductor equipment company, agreed to a permanent injunction against further violations of the federal securities laws. It settled without admitting or denying the allegations. The Commission said the settlement reflected Brooks’ “swift, extensive, and extraordinary cooperation” with the investigation. Brooks’ former president and chief executive officer, Robert Therrien, is the subject of a separate SEC enforcement action taken in July 2007. The SEC alleged that Therrien received millions of dollars in undisclosed compensation by backdating his exercise of options to purchase company stock. At the same time, he was indicted on a tax evasion charge for his alleged conduct in connection with a specific, November 1999 option transaction. According to the Commission, Therrien’s alleged actions and also “improper accounting” by Brooks resulted in misleading disclosures from 1996 through 2005. In 2000, for example, Brooks overstated its net income by as much as 30 percent, the SEC said. “Brooks,” the SEC said “misstated that all stock options were granted at or above the fair market value of the stock on the date of the award, when that was not the case.”

The Litigation Release for this matter may be found at http://www.sec.gov/litigation/litreleases/2008/lr20584.htm

For more information on this subject contact securities attorneys, Michaels, Ward & Rabinovitz, LLP.