SEC Fines Lucent, Charges Executives

Federal regulators charged nine former and current Lucent Technologies Inc. executives with securities fraud Monday and fined the company $25 million in a settlement, saying Lucent failed to cooperate fully in an accounting investigation.

The Securities and Exchange Commission also charged a former executive of Winstar Communications Inc. with securities fraud and aiding and abetting Lucent’s alleged violations of securities laws in the accounting irregularities.

In a civil lawsuit filed in federal court in Newark, N.J., the SEC alleged that Lucent fraudulently booked about $1.1 billion in revenue in 2000.

The executives, pushing to increase revenue, meet sales targets and reap sales bonuses, failed to disclose incentives that Lucent gave customers to induce them to buy its products, the SEC said in the suit.

Lucent’s shares fell 18 cents to $3.10 on the New York Stock Exchange.

In the case of Winstar, the SEC alleged that former Lucent sales executive William Plunkett and David Ackerman, a former Winstar executive vice president, engaged in a scheme that led to Lucent prematurely booking $125 million in revenue from a software licensing deal with Winstar. The scheme included postdating letters documenting agreements between the two companies, the SEC said.

Plunkett agreed in a settlement with the SEC to pay a $110,000 civil fine. Ackerman is contesting the SEC’s allegations.

Lucent neither admitted to nor denied wrongdoing in its settlement. The company was not required to restate its earnings, but agreed not to commit future such violations.

“Since bringing this matter to the SEC’s attention, we have addressed these issues with increased controls and disclosures in our organization,” Lucent Chairman and Chief Executive Patricia Russo said in a statement.