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SEC LITIGATION RELEASE
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EXTRACTED KEY WORDS
PATHE PARRETTI FIORINI COMMISSION TRANSACTION VIOLATIONS CINEMA CAPPUCCIO EXCHANGE FINANCING ASSISTANCE DISCLOSE SECURITIES DUTCH NETHERLANDS AUTHORITIES INVESTMENT BANKING FIRM MERGER BOOKS REPRESENTATIONS INDEPENDENT ACCOUNTANT MGM/UA DIRECTORS CONSENT DESIST ORDERS CEASE OFFICER FILING THEREUNDER |
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 14770 / January 3, 1996
ACCOUNTING AND AUDITING ENFORCEMENT Release No. 746
SECURITIES AND EXCHANGE COMMISSION v. GIANCARLO PARRETTI, Civil
Action No. 1:96CV00013 (NHJ) (D.D.C.)
The Securities and Exchange Commission ("Commission")
announced the filing today of a Complaint against Giancarlo
Parretti, formerly the Chief Executive Officer and a director of
the motion picture company Pathe Communications Corp. ("Pathe")
in the United States District Court for the District of Columbia.
The Commission also announced that it issued cease and desist
orders by consent against Florio Fiorini, formerly the Chairman
of Pathe's Board of Directors, and Fernando Cappuccio, formerly
Pathe's Chief Financial Officer and a director. All three
enforcement actions concern materially false and misleading
disclosures regarding two transactions by Pathe: its purported
sale of certain theater properties in 1989; and its acquisition
of MGM/UA Communications Company in 1990.
The complaint in the injunctive action alleges that in
December 1989 Pathe entered into a transaction in which it
purported to sell and lease back certain theater properties to an
entity by the name of Cinema 5 Europe N.V. for more than $200
million. The complaint alleges that transaction was a sham
because Cinema 5 was not independent of Pathe, and in particular
that Pathe had provided the funds to establish Cinema 5, that the
managing directors of Cinema 5 were Parretti's friends and
business associates, and that Cappuccio was Cinema 5's sole
representative in arranging the transaction. The complaint
alleges that Parretti directed that the transaction be recorded
in Pathe's books and records and disclosed in periodic filings
with the Commission falsely as a sale to an unrelated third
party. The complaint alleges that as a result Pathe improperly
recognized gains of more than $100 million on the transaction,
and that its financial statements for 1989 and the first quarter
of 1990 were materially overstated. The complaint further
alleges that Parretti falsely represented to Pathe's independent
accountant and in news releases that Cinema 5 was not affiliated
with Pathe but was owned and/or controlled by a prominent Italian
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