U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20508 / March 25, 2008

Accounting and Auditing Enforcement Release No. 2802 / March 25, 2008

SEC v. Romulus S. Pereira et al., Civil Action No. 3:06-CV-06384-MHP (N.D. Cal., filed October 12, 2006)

SEC Settles With Former Officers of Riverstone Networks, Inc.

The Securities and Exchange Commission ("Commission") announced today that the Honorable Charles R. Breyer of the United States District Court for the Northern District of California has entered, by consent, orders of permanent injunction and other relief ("Orders") in a civil action the Commission brought against five former officers and one former employee of Riverstone Networks, Inc. ("Riverstone"), a California-based company that formerly manufacture and market communications routers. In the lawsuit, the Commission alleged that from June 2001 through June 2002, these defendants participated in a scheme to inflate Riverstone's publicly-reported net revenues through improper revenue recognition on contingent sales (SEC Lit. Rel. No. 19869). The defendants, in consenting to the Orders, neither admitted nor denied the allegations of the Commission's complaint.

Pursuant to the Orders, former Riverstone officers Romulus S. Pereira, chief executive officer, Robert B. Stanton, chief financial officer, L. John Kern, executive vice president of sales, Andrew D. Feldman, vice president of marketing, and William F. McFarland, vice president of finance, have been enjoined from violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 10b-5, 13b2-1, and 13b2-2 thereunder, and from aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder. Defendants Pereira, Stanton, and McFarland were further enjoined from aiding and abetting violations of Section 13(b)(2)(B)(ii) of the Exchange Act. Former Riverstone employee Lori H. Cornmesser, director of sales operations, was enjoined from violating Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder, and from aiding and abetting violations of Section 13(b)(2)(A) of the Exchange Act and Rule 13b2-2 thereunder. The Orders also require defendants Pereira, Stanton, Kern, Feldman, and Cornmesser to pay disgorgement in the amount of $375,000, $175,000, $347,066, $289,507, and $17,054, respectively. Defendants Pereira, Stanton, and McFarland were further ordered to pay civil penalties in the amount of $75,000, $75,000, and $40,000, respectively. Finally, defendants Pereira, Stanton, and Kern have been barred for a period of five years from acting as an officer or director of a public company.

In related criminal cases, defendants Kern and Feldman pled guilty to one felony count each of violating the internal accounting controls of a public company under the provisions of Sections 13(b)(5) and 32 of the Exchange Act. In December 2007, they were each sentence to three years of probation and fined $5,000. U.S. v. Kern, Case No. 3:0-CRr-00733 and U.S. v. Feldman, Case No. 3:07-CR-00731 (N.D. Cal.).

Order of Permanent Injunction Against Pereira
Order of Permanent Injunction Against Stanton
Order of Permanent Injunction Against Kern
Order of Permanent Injunction Against Feldman
Order of Permanent Injunction Against McFarland
Order of Permanent Injunction Against Cornmesser

http://www.sec.gov/litigation/litreleases/2008/lr20508.htm