Scientific-Atlanta to Settle Adelphia Case
Technology company Scientific-Atlanta Inc. has agreed to return $20 million to resolve federal regulators’ allegations that it helped now-bankrupt Adelphia Communications Corp. improperly inflate its earnings by about $43 million in 2000.
The Securities and Exchange Commission announced the settlement Thursday with Scientific-Atlanta, a cable-TV technology company that was acquired by Cisco Systems Inc. in February for $6.9 billion. Scientific-Atlanta neither admitted nor denied wrongdoing under the accord but agreed to refrain from future violations.
Scientific-Atlanta was not fined; the SEC cited the company’s cooperation in the agency’s investigation.
In addition, two Scientific-Atlanta senior vice presidents -- Wallace Haislip and Julian Eidson -- agreed to refrain from future violations in a related settlement. They neither admitted nor denied the SEC’s allegations.
Scientific-Atlanta, a maker of boxes that go atop cable TV sets, entered into a marketing agreement with Adelphia in 2000 that Adelphia misused to inflate its earnings by about $43 million, the SEC said in a civil lawsuit filed in federal court in Manhattan. Adelphia asked Scientific-Atlanta to increase the price of the boxes that it sold to the company and give the amount of the price increase back to Adelphia as marketing support payments, the SEC alleged.
Adelphia used the price increase to artificially inflate its earnings, according to the SEC.
Adelphia, which has been operating under bankruptcy protection since 2002, was one of the biggest companies in recent years accused of cheating investors out of billions of dollars. It agreed last year to pay $715 million in civil fines and restitution.
