Raytheon Company will pay a $12 million fine to the Securities and Exchange Commission (SEC) to settle an investigation into its financial disclosures and accounting practices, primarily related to its commuter aircraft business from 1997 to 2001.
Although Raytheon or the executives involved did not admit any wrongdoing, the company has agreed to sign a cease-and-desist order related to violations of SEC rules. Former Raytheon CEO Daniel Burnham and former deputy CFO of Raytheon Aircraft Aldo Servello must also pay $1,238,344 and $34,628, respectively, in disgorged bonuses, fines and interest.
The SEC launched the investigation in early 2003, when it charged the company with fraud for failing to fully disclose its declining financial results and improperly recognizing revenue on its sale of unfinished aircraft through “bill and hold” transactions. The charges became public days after the Justice Department announced that Raytheon Aircraft paid some $4 million to settle a case related to allegations that it falsely billed the government for insurance costs incurred by its JPATS program.