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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
SSA SECURITIES EXCHANGE COVEY SKADRA VIOLATIONS EXCHANGE COMMISSION SYSTEM SOFTWARE EXCHANGE ACT DEFENDANT SSA ROGER COVEY JOSEPH SKADRA DISTRICT PERMANENT ALLEGATIONS ACCORDING REVENUE SALES FINANCIAL STATEMENTS FORMER CHIEF OFFICER FEDERAL SECURITIES LAWS CONNECTION FALSE FINANCIAL STATEMENTS JUDGEMENT PERMANENT INJUNCTION CIVIL PENALTIES DISGORGEMENT SALARY BONUSES |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Litigation Release No. 16694 / September 8, 2000
SECURITIES AND EXCHANGE COMMISSION v. SYSTEM SOFTWARE ASSOCIATES,
INC., ROGER COVEY and JOSEPH SKADRA, Civ. No. 00C 4240 (July 13, 2000,
N.D. Ill.)
On August 25, 2000, the U.S. District Court for the Northern District
of Illinois entered an Order permanently restraining and enjoining
System Software Associates, Inc. ("SSA"), from violating or aiding and
abetting violations of Section 17(a) of the Securities Act of 1933,
Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities
Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 12b-20, 13a-1,
and 13a-13 thereunder. The Order provides all of the relief sought
against defendant SSA in the Commission's complaint. Defendant SSA
consented to the entry of the order without admitting or denying the
allegations in the Complaint.
According to the allegations in the Commission's Complaint, SSA
misstated its financial results during its fiscal years 1994 through
1996 by improperly reporting revenue on sales of a development-stage
UNIX-language software product. The Complaint also alleged that,
during 1995 and 1996, SSA recognized approximately $52 million in
revenue from sales of its UNIX product that were subject to side
letters or other material contingencies. According to the Complaint,
SSA's fraudulent activities resulted in substantial losses to those
public investors who purchased SSA stock during the period when the
company's financial statements were misstated.
The remaining defendants, SSA's former Chief Executive Officer and
Chairman of the Board, Roger Covey, and its former Chief Financial
Officer, Joseph Skadra, have not entered into settlements with the
Commission. Covey and Skadra are alleged in the complaint to have
violated or aided and abetted violations by SSA of the anti-fraud and
other provisions of the federal securities laws in connection with
SSA's false financial statements. The Complaint seeks a Judgment of
Permanent Injunction against Covey and Skadra as well as civil
penalties and disgorgement of salary bonuses.
_________________________________________________________________
Modified 10/18/2000
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