The Securities and Exchange Commission has served the Goodyear Tire & Rubber Co. and two former company finance executives with Wells Notices, according to company documents and press reports. The action stems from an investigation into the company’s accounting practices and the financial restatement first announced in October 2003.
The notice served on the company states that the SEC staff intends to recommend a civil or administrative enforcement action against Goodyear for alleged violations of Securities and Exchange Act of 1934 provisions. The charges concern “the maintenance of books, records, and internal accounting controls, the establishment of disclosure controls and procedures,” and periodic SEC filing requirements, according to the company. The charges concern account reconciliation matters that spawned the company’s decision to restate in October 2003.
The two former finance executives who received notices are Robert Tieken, the former CFO, and Stephanie Bergeron, the former chief accounting officer, according to the online version of The Wall Street Journal. Neither of them could be reached by the paper for comment.
Company representative Keith Price told the Journal that “we continue to implement ongoing improvements in our financial controls.”
In October 2003, Goodyear said it would restate earnings from 1998 through 2002 and for the first and second quarters of 2003 by $100 million. The restatement was aimed at recording adjustments mainly caused by a 1999 enterprise resource planning (ERP) system implementation and errors in intercompany billing systems.
In December 2003, the company revealed fresh accounting problems with its books would delay the filing of its amended 2002 annual report. In February 2004, the SEC upped an informal inquiry of Goodyear’s restatement to a formal order of investigation.
Under SEC procedures, a “Wells Notice” indicates that the staff has made a preliminary choice to recommend that the commission approve the staff to bring civil or administrative actions recipients of notices. Recipients can respond to the SEC staff before the staff makes a formal recommendation about whether an action should be brought by the SEC.