5 Ex-Officers of Oak Industries Settle With SEC : Chairman, 4 Others Accused of Violating U.S. Securities Laws
Former Oak Industries Chairman Everitt A. Carter, after being charged with violating federal securities laws, signed an unusually harsh settlement agreement with the Securities and Exchange Commission on Thursday. The settlement prohibits him from ever again serving as an officer or director of a U.S-based public company.
While Carter neither admitted nor denied any wrongdoing, he also agreed not to violate any securities laws in the future.
In addition, former Oak Chief Financial Officer Frank Astrologes and President Raymond W. Peirce, whom the SEC had charged in civil lawsuits with providing “materially false and misleading information” to Oak shareholders during 1982 and 1983, also signed settlements with the SEC. Like Carter, they did not admit to any wrongdoing but agreed to refrain from any future violations of securities laws.
Thomas C. Runge and Michael R. Maury, former Oak vice presidents, signed separate settlement agreements stemming from SEC administrative charges that they violated various federal securities laws. They too, without admitting or denying any wrongdoing, agreed to refrain from any future violations of securities laws.
Fighting to Restructure
The civil suits and the settlements filed Thursday capped a 26-month SEC investigation of Oak, the Rancho Bernardo-based communications and electronics company that has been fighting to restructure itself after its net worth plummeted to a negative $58 million in early 1985.
Last June, the SEC charged that Oak defrauded its shareholders between 1980 and 1983 when it lied in its public financial disclosures and improperly used corporate funds to purchase perquisites for Carter.
Without acknowledging any guilt, Oak entered into a consent decree that prohibited the company from violating federal securities laws.
An SEC official said the prohibition against Carter being an officer or director of a public company is an extraordinarily stiff settlement.
The prohibitions against Carter are “a fairly significant thing,” said Jerry A. Isenberg, an SEC attorney. “This isn’t something that happens every day.”
SEC officials particularly emphasized the inclusion of Runge and Maury, two lower-level Oak managers, in its investigation.
“The commission took the position that these fellows can’t just simply stand by as good soldiers and look the other way,” according to Isenberg.
Oak spokeswoman Mary Lou Coburn declined to comment on the settlements. None of the former Oak officers and directors named in the settlements was available for comment.
According to court documents, Carter, Peirce and Astrologes caused Oak’s reported net income, assets and operating results to be “materially overstated” for the first three quarters of 1982.
Between 1980 and 1982, according to SEC documents, the three men caused the company to report record net income when, in fact, Oak’s financial health had “severely deteriorated.”
Astrologes, according to the SEC, knew, or should have known, that one Oak subsidiary had prepared three different sets of financial data for use in different parts of the company.
The commission also alleged that Carter violated proxy solicitation provisions of the securities laws between 1980 and 1984 when he accepted gifts and services--including flowers, meals, tips, green fees, ski lift tickets, tennis time, theater tickets, sports equipment and clothing--that were not disclosed in Oak’s proxy statements.
A federal judge in San Diego has been reviewing a $13.25-million negotiated settlement that stemmed from a 1983 class-action suit brought against the corporation by disgruntled Oak shareholders.
