VeriFone restates their financials

In 2009, Silicon Valley technology company, VeriFone settled charges with the SEC concerning the company’s restatement of quarterly financials. In 2007, SEC alleged that the company had released materially false quarterly reports for the first, second and third fiscal quarters of that year.

The allegation states that VeriFone’s former supply chain controller, Paul Periolat, made improper modifications to inventory so that the company could meet its previosuly announced earnings guidance. Periolat allegedly manually adjusted the inventory of a subsidiary for the first quarter of 2007, even though he was aware that the reported inventory was correct. The SEC alleged that Periolat improperly manually adjusted inventories again in the second and third quarters of that year.

On August 19, 2008, the company released the restated financials. Cumulatively, operating income for the three quarters decreased from $65.6 million to $28.6 million, an overstatement of 129%.