No SEC Deal on Veritas Penalty
The Securities and Exchange Commission has deadlocked on a proposed fine for Veritas Software Corp. as Democrats and Republicans split along party lines, people familiar with the deliberations said Wednesday.
Harvey Goldschmid and Roel Campos, the SEC’s two Democratic commissioners, voted in favor of approving a $30-million penalty that Veritas agreed to pay, while Republicans Paul Atkins and Cynthia Glassman opposed it as too severe, according to the sources.
The SEC, which investigated the company’s accounting, may revisit the case or drop it altogether at a later date.
Outgoing SEC Chairman William H. Donaldson didn’t participate in the vote Monday, underscoring the role he has played as a political tie-breaker in his 28 months at the agency. Without Donaldson, who frequently sided with Democrats to push through fines against companies such as Time Warner Inc., the balance may tip toward the Republicans. Donaldson, 74, leaves June 30.
Christopher Cox, the 52-year-old Republican congressman from Newport Beach picked to replace Donaldson, “is going to vote with Atkins and Glassman,” said Adam Pritchard, a former SEC lawyer who is now a professor at the University of Michigan Law School. “You’d be surprised if he didn’t agree with them on the penalties.”
Cox spokesman Paul Wilkinson, SEC spokesman Matt Well and Veritas spokeswoman Marlena Fernandez Berkowitz declined to comment.
Veritas, a Mountain View, Calif.-based maker of data-storage software, last month said it expected to settle the SEC accounting probe by paying a fine of about $30 million.
According to a May 6 filing by Veritas with the SEC, the settlement related to “certain transactions in 2000” with Time Warner and “other parties.”
Veritas agreed in December to be acquired by Symantec Corp. in a transaction now valued at about $9 billion.
Genevieve Haldeman, a spokeswoman for Cupertino, Calif.-based Symantec, said the unresolved SEC probe would have “no impact” on the planned purchase.
Atkins and Glassman have opposed corporate fines in accounting fraud cases, arguing that it’s wrong for shareholders to bear the cost. They support stiffer penalties for the individuals responsible for misconduct.
Cox has favored limits on shareholder lawsuits, which have a similar “punish-the-corporation aspect” as SEC fines, Pritchard said. Cox still has to be confirmed by the Senate.
