UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 42933 / June 14, 2000
ACCOUNTING AND AUDITING ENFORCEMENT
Release No. 1272 / June 14, 2000
ADMINISTRATIVE PROCEEDING
File No. 3-10225
_________________________________________________________________
In the Matter of
CENDANT CORPORATION,
Respondent.
_________________________________________________________________
ORDER INSTITUTING PUBLIC
ADMINISTRATIVE PROCEEDINGS
PURSUANT TO SECTION 21C
OF THE SECURITIES EXCHANGE ACT OF
1934, MAKING FINDINGS, AND IMPOSING
A CEASE-AND-DESIST ORDER
I.
The Securities and Exchange Commission ("Commission") deems it
appropriate that public administrative proceedings be, and hereby are,
instituted pursuant to Section 21C of the Securities Exchange Act of
1934 ("Exchange Act") against CENDANT Corporation ("CENDANT" or
"Respondent").
II.
In anticipation of the institution of these administrative
proceedings, Cendant has submitted an Offer of Settlement ("Offer")
which the Commission has determined to accept. Solely for the purpose
of these proceedings, and any other proceeding brought by or on behalf
of the Commission, or in which the Commission is a party, without
admitting or denying the findings set forth below, except as to
jurisdiction of the Commission over it and over the subject matter of
these proceedings, which Respondent admits, Respondent consents to the
entry of this Order Instituting Public Administrative Proceedings
SNIPPETS:
ORDER INSTITUTING PUBLIC ADMINISTRATIVE PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES
The Securities and Exchange Commission deems it appropriate that public administrative
In anticipation of the institution of these administrative proceedings, Cendant has submitted
Cendant, a Delaware corporation with its headquarters in New York City, was created through
As of March 1, 2000, Cendant's common stock, Income PRIDES, and Growth PRIDES were registered
Moreover, upon consummation of the merger, Cendant attempted to conduct its business with
For more than twelve years, until its exposure in 1998, certain members of CUC's senior and
CUC senior management overseeing the scheme maintained an annual schedule listing revenue and
management manipulated recognition of the company's membership sales revenues.
Second, management improperly utilized two liability accounts related to membership sales,
management periodically kept certain membership sales transactions off-books.
In what was the most significant category quantitatively, CUC management intentionally
The quarterly changes were made solely as top-side adjustments in the spreadsheet -- that is,
At the end of each fiscal year, the CUC managers implementing the scheme utilized the
CUC managers falsified the company's books and records and failed to implement a system of
In the earlier years of the scheme, senior management relied in large part on manipulating
An additional set of procedures involved understating the membership sales cancellation
These profit-and-loss adjustments were almost always made exclusively in the spreadsheet
The Comp-U-Card division, where most membership sales took place, marketed a variety of
Moreover, Comp-U-Card did not always recognize, or amortize, revenue from the sales of its
By May of 1997, those discussions had resulted in the Cendant merger agreement, and the
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