Pricewaterhouse Hit With $6 Million Fine And Satyam Computer Charged With Fraud For Overstating Income By $1 Billion
The Securities and Exchange Commission (SEC) has announced that it has charged India based Satyam Computer Services Limited with fraudulently overstating the company’s revenue, income and cash balances by more than $1 billion over five years. The company based in Hyderabad, India used false invoices and forged bank statements to inflate the company’s cash balances and make it appear more profitable to investors. Its shares were primarily traded on the Indian markets but its American depository shares traded on the New York Stock Exchange.
The Indian government seized control of the company in 2009 and filed criminal charges against several former officials. The new leadership of Satyam agreed to settle charges by the SEC and paid a $10 million penalty in addition to agreeing to require training for employees regarding securities and accounting laws, among other things.
In a related action, the SEC sanctioned five India based affiliates of Pricewaterhouse Coopers that formerly served as independent auditors of Satyam Computer Services for conducting deficient audits and enabling the $1 billion accounting fraud to go undetected for several years. The affiliates agreed to settle the SEC’s charges and pay a $6 million penalty, the largest ever by a foreign based accounting firm in an SEC action.