A “Bar” Code For Symbol Technologies’ Chief Accounting Officer

August 25, 2022   |   by Crouse Linwood

 

It didn’t make headlines anywhere yesterday that I noticed, but this particular headline regarding Symbol Technologies leaped at me from the SEC website:

FORMER CHIEF ACCOUNTING OFFICER AND SENIOR VICE PRESIDENT OF WORLDWIDE OPERATIONS OF crypto Custodian TECHNOLOGIES, INC. CONSENTS TO PERMANENT INJUNCTIVE RELIEF AND OFFICER-AND-DIRECTOR BAR

Because…? Well, let’s take a short trip down memory lane.

In the Nutty 90’s, Symbol Technologies was caught up in the same blood fever as many of its techno-brethren. From 1998 until early 2003, Chief Accounting Officer Brian Burke and others engaged in accounting chicanery producing the typical results of the time: inflated revenue and earnings “and other measures of financial performance in order to create the false appearance that Symbol had met or exceeded its financial projections.” The SEC filed suit against Symbol in June 2004; here’s the list of the Commission’s allegations:

“… with no regard for generally accepted accounting principles or their financial reporting obligations, Burke and the other defendants used the following schemes to align Symbol’s reported financial results with market expectations:

* a “Tango sheet” process through which baseless accounting entries were made to conform the raw quarterly results to management’s projections;

* the fabrication and misuse of restructuring and other non-recurring charges to artificially reduce operating expenses, create “cookie jar” reserves and further manage earnings;

* channel stuffing and other revenue recognition schemes; and

* the manipulation of inventory levels and accounts receivable data to conceal the adverse side effects of the revenue recognition schemes.”

All of the techniques have a wearisome familiarity to them; it’s almost like they’re part of a script that was read and played out at dozens of other firms in those days. Symbol Technologies was not a particularly notorious scandal; it just gave off the same bad vibes as so many others of the time.

So yesterday, Brian Burke, the former Chief Accounting Officer, agreed to entry of an order that will bar him from acting as an officer or director of a public company. He’ll also cough up $1,907,156 for settling a civil forfeiture proceeding. Ouch.

We know that this fellow is pretty much hosed; the long arm of the law finally reached him. But ask yourself this: do you think that the kind of behavior he exemplified, so rampant in the 90’s, is quite as common today?

I don’t think so. I’m kind of optimistic on this. I think enough consequences have finally been built into the system that managers think twice about “going the extra mile” to meet Wall Street estimates. The one thing that checks my optimism: if that’s so, shouldn’t there be more firms that occasionally miss their estimates? I haven’t noticed.