Securities Regulation Daily SEC obtains final judgment against CEO charged with accounting fraud
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Thursday, July 6, 2017

SEC obtains final judgment against CEO charged with accounting fraud

By Joseph Arshawsky, J.D.

The SEC announced that it obtained a final judgment against Ryan Petersen, the former chief executive officer of OCZ Technology Group Inc. ("OCZ") whom the SEC charged with an accounting fraud at the now-bankrupt seller of computer memory storage and power supply devices (SEC v. Petersen, June 30, 2017, Seeborg, R.).

The final judgment permanently enjoins Petersen from violating Securities Act Section 17(a), Exchange Act Sections 10(b) and 13(b)(5), and Exchange Act Rules 10b-5, 13a-14, 13b2-1, and 13b2-2, and aiding and abetting violations of Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B), and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13. The judgment also bars Petersen from acting as an officer or director of a public company, and orders him to pay a total of $240,000, consisting of $121,600 in disgorgement and relief pursuant to Sarbanes-Oxley Section 304(a), prejudgment interest on the disgorgement of $18,400, and a civil penalty in the amount of $100,000. Petersen consented to the final judgment.

The court's entry of the judgment against Petersen resolves this litigation in its entirety. The SEC charged Petersen with engaging in a scheme to materially inflate OCZ's revenues and gross margins from 2010 to 2012. The SEC separately charged OCZ's former chief financial officer, Arthur Knapp, with certain accounting, disclosure, and internal accounting controls failures at OCZ. Knapp agreed to settle the SEC's charges and, on October 23, 2015, the SEC suspended Knapp from appearing or practicing before the SEC as an accountant. On August 29, 2106, the SEC suspended Thomas Dulek, a California-based accountant, from appearing and practicing before the SEC as an accountant based on his violations of important auditing standards. The SEC's investigation found that Dulek conducted deficient audits of OCZ's financial statements for fiscal years 2011 and 2012.

The case is No. 3:15-cv-04599-RS.

Attorneys: Ian Ronald Dattner for the SEC. David Siegel (Irell & Manella LLP) for Ryan Petersen.

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