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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15097 / September 30, 1996
Accounting and Auditing Enforcement
Release No. 837 / September 30, 1996
SECURITIES AND EXCHANGE COMMISSION v. SURENDRA GUPTA, BHASKER B.
RAO, AND R. RAMANA PENUMARTY, United States District Court for
the Northern District of California, Civil Action No. 96-20809
RMW EAI.
The Securities and Exchange Commission today announced the
filing of a complaint with the United States District Court for
the Northern District of California against Surendra Gupta, a
resident of San Jose, California and former president of
California Micro Devices Corporation ("Cal Micro"); Bhasker B.
Rao, a resident of Chandler, Arizona and former vice president
and general manager of Cal Micro's Tempe, Arizona plant
operations; and R. Ramana Penumarty, a resident of Folsom,
California and former vice president and general manager of Cal
Micro's Milpitas, California plant operations. The Commission's
complaint alleges financial reporting fraud by all three and
illegal insider trading by Rao and Penumarty.
The complaint alleges that during Cal Micro's fiscal year
ended June 30, 1994 the defendants artificially inflated Cal
Micro's publicly reported revenue by directing employees to
falsify documents in order to create the appearance that certain
goods had been shipped to customers when, in fact, the goods had
not been shipped or, in most cases, manufactured. The
defendants' conduct allegedly caused the Company to recognize
revenue for the sale of unshipped and non-existent products, in
violation of Generally Accepted Accounting Principles ("GAAP")
and federal securities laws.
The complaint further alleges that as a result of the
defendants' fraudulent conduct, Cal Micro's financial statements,
as incorporated in its quarterly reports on Forms 10-Q for at
least the second and third fiscal quarters of 1994, ended
December 31, 1993 and March 31, 1994, respectively, and in its
annual report on Form 10-K for the fiscal year ended June 30,
1994, were materially false and misleading. Net sales for the
second and third fiscal quarters were overstated by $4.98 million
or 95%, and $6.1 million or 117%, respectively. Net sales for
fiscal year 1994 were overstated by $15.93 million or 71%.
SNIPPETS:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION v. SURENDRA GUPTA, BHASKER B. RAO, AND R. RAMANA
The Securities and Exchange Commission today announced the filing of a complaint with the
ce president and general manager of Cal Micro's Milpitas, California plant operations.
The Commission's complaint alleges financial reporting fraud by all three and illegal insider
The complaint alleges that during Cal Micro's fiscal year ended June 30, 1994 the defendants
The defendants' conduct allegedly caused the Company to recognize revenue for the sale of
Net sales for the second and third fiscal quarters were overstated by $4.98 million or 95%,
controls, artificially inflated its reported revenues, and received internal reports which
Between August 4, 1994 and January 10, 1995, Cal Micro issued a series of press releases
In its complaint, the Commission seeks an order permanently enjoining Gupta from violating
13, 13, 13, and 13of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13b2-1 thereunder.
In addition, the Commission's complaint seeks disgorgement of the losses Rao and Penumarty
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