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SEC Settles Company Certification Case

August 18, 2003

WASHINGTON (AP) _ In the first case of enforcing the provision of the Sarbanes-Oxley Act that calls for executives to swear to a company’s financial statements, the Securities and Exchange Commission settled Monday with Rica Foods Inc. and two of its officers.

Rica Foods, which is based in Miami, grows chickens in Costa Rica via its Pipasa and As de Oros units. It supplies chicken to McDonald’s, Burger King, and KFC, according to its Web site.

According to the SEC, Rica Foods submitted an annual report on Jan. 13 that purported to contain a green light from the company’s outside auditor, Deloitte & Touche. In reality, however, Deloitte hadn’t provided Rica Foods with a signed audit report, and the company’s ``financial statements contained material classification errors,″ the agency said.

Chief Executive Calixto Chaves, Chief Financial Officer Gina Sequeira and the company consented to an order permanently barring them from further securities laws violations, and Chaves must pay a $25,000 civil penalty.

All settled without admitting or denying the SEC’s allegations.

The Sarbanes-Oxley Act requires top company executives to give their word that the company’s financial statements are reliable and prepared according to generally accepted accounting principles.

Rica Foods recently engaged a new independent auditor and filed an amended annual report that contained a signed audit.

The Sarbanes-Oxley Act, introduced last year, also allows for criminal punishment against officers if they violate the certification requirements. Glenn Gordon, assistant deputy director in the SEC’s Southeast Regional Office, declined to comment on any criminal aspects of the case, which come under the purview of the Department of Justice.

Attorneys representing Chaves and Sequeira weren’t immediately available to comment.

Rica Foods attorney David Wells declined to comment.

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