SEC News Digest

ENFORCEMENT PROCEEDINGS

In the Matter of Cablevision Systems Corporation

On January 22, the Commission issued a settled Order Instituting Cease and Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease and Desist Order (Order) against Cablevision Systems Corporation (Cablevision). The Order finds that from at least 1999 though mid-2003, contrary to Generally Accepted Accounting Principles (GAAP), Cablevision recognized certain costs as current expenses when, in fact, the costs should not have been recognized in those periods. These improper "prepays," as the practice was referred to, occurred because certain Cablevision managers and employees falsified invoices and other documents in order to accrue expenses earlier than when they in fact should have been accrued. These improperly recognized expenses were reflected in Cablevision's books, records and accounts and caused Cablevision to overstate expenses in earlier fiscal periods, and understate expenses in later periods.

The Commission's Order also finds that, in addition to improper prepays, from at least 2000 through late 2003, contrary to GAAP, Cablevision improperly recognized launch and marketing support payments, which were paid to Cablevision by television program vendors for advertising and marketing campaigns to attract viewers to the vendors' programs. These errors occurred in and directly affected financial reporting for Cablevision's cable distribution business. The improper timing of the recognition of launch support was reflected in Cablevision's books, records and accounts and caused Cablevision to reduce expenses in the periods in which launch support was improperly recognized and correspondingly increase expenses in the periods when the launch support should have been recognized. The improper recognition of prepays and launch support payments caused Cablevision's reports to the public and the Commission to be materially inaccurate.

Based on the above findings, the Order directed that, pursuant to Section 21C of the Securities Exchange Act of 1934 (Exchange Act), Cablevision cease and desist from committing or causing any violations and any future violations of the periodic reporting, books and records and internal controls provisions of the Exchange Act, namely Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1 and 13a-13. Cablevision consented to the issuance of the Order without admitting or denying any of the findings of the Order. In determining to accept Cablevision's offer of settlement, the Commission considered remedial acts promptly undertaken by Cablevision and cooperation afforded the Commission staff. (Rel. 34-59277; AAE Rel. 2920; File No.3-13347)

In the Matter of Catherine R. McEnroe, Noreen O'Loughlin and Martin R. Von Ruden

On January 22, the Commission instituted settled cease-and-desist proceedings against Catherine R. McEnroe, Noreen O'Loughlin and Martin R. Von Ruden, former employees of Cablevision Systems Corporation (Cablevision). The Commission's Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order (Order) finds that they violated provisions of the Federal securities laws prohibiting the falsification of certain books, records or accounts in connection with improper expense recognition at Cablevision.

The Commission's Order finds that from at least 1999 through mid-2003, contrary to Generally Accepted Accounting Principles, Cablevision recognized certain costs as current expenses when, in fact, the costs should not have been recognized in those periods. These improperly recognized expenses were reflected in Cablevision's books, records and accounts and caused Cablevision to overstate expenses in earlier fiscal periods and understate expenses in later periods. As a result, Cablevision's reports to the public and the Commission for the period 1999 through mid-2003 were inaccurate, causing Cablevision in 2004 to restate its financial statements for 2000 through the nine months ended September 30, 2003. The Order further finds that McEnroe, O'Loughlin and von Ruden, while serving as officers and managers of significant business units of Cablevision, directed and were aware of improper prepays and signed inaccurate authorization for payment forms that caused improper prepays. Based on the above, the Order directs that, pursuant to Section 21C of the Securities Exchange Act (Exchange Act), Respondents cease and desist from committing or causing any violations and any future violations of Sections 13(b)(5) of the Exchange Act and Exchange Act Rule13b2-1. Respondents consented to the issuance of the Order without admitting or denying any of the findings in the Order.

Simultaneously with the institution of the Order, the Commission filed a settled civil action against McEnroe, O'Loughlin and von Ruden alleging the same conduct and violations as above and seeking civil money penalties. Without admitting or denying the allegations in the Commission's complaint, McEnroe, O'Loughlin and von Ruden consented to final judgments ordering them to pay civil penalties of $30,000, $15,000 and $15,000, respectively. [SEC v. Catherine R. McEnroe, Noreen O'Loughlin and Martin R. von Ruden, Civil No.CV-09-0249 (E.D.N.Y. Jan. 22, 2009)] (LR-20862; Rel. 34-59278: AAE REL. 2921, File No.3-13348).

SEC Settles Insider Trading Case With Aaron S. Cooksey

On January 22, the Commission filed a civil action against Aaron S. Cooksey, a resident of Austin, Texas, alleging that he committed insider trading. The Commission's complaint alleges that from November 2007 to early February 2008, Freescale Semiconductor, Inc. and SigmaTel, Inc. negotiated a deal that resulted in Freescale acquiring SigmaTel. During this time, Cooksey was Freescale's manager of qualified plans and worked on the pre-acquisition due diligence. While performing his job duties, Cooksey learned material nonpublic information about the SigmaTel acquisition. The complaint further alleges that he misappropriated this information when he purchased SigmaTel stock before Freescale publicly announced the deal.

Cooksey has consented to the entry of a final judgment that permanently enjoins him from violating Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. Cooksey has agreed to pay disgorgement in the amount of $23,552, plus prejudgment interest of $883.70, and a civil money penalty in the amount of $23,552. Cooksey neither admits nor denies the allegations in the complaint. [SEC v. Aaron S. Cooksey, Civil Action No. 1:09-CV-044-LY U.S.D.C./Western District of Texas (Austin Division)] (LR-20863)

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http://www.sec.gov/news/digest/2009/dig012309.htm