SEC Seeks Court Nod for Distribution in Bisys Financial Reporting Case
The Securities and Exchange Commission filed a motion in SEC v. The BISYS Group, Inc. 07 Civ. 4010 (RJS) (S.D.N.Y.), a financial reporting case, seeking court approval of a plan to distribute the approximately $25 million available for distribution to investors harmed by the conduct alleged in that case.
In connection with that motion, on February 8, 2012, the Hon. Richard J. Sullivan issued an order appointing A.B. Data, Ltd., the claims administration firm that served as the court-appointed claims administrator in a parallel class action, In re BISYS Securities Litigation, 04-Civ-3840 (JSR) (S.D.N.Y.), as the claims administrator in the Commission’s case.
The Court’s order also directed the posting of notice of the proposed Plan on the Commission’s website and A.B. Data’s website and set a deadline of March 12, 2012 for the submission of any comments or objections.
If approved by the Court, the Distribution Plan will govern the distribution of the approximately $25 million paid by BISYS in settlement of the case, plus additional funds that may added from the approximately $225,000 paid in settlement by the defendant in a related case, SEC v. Wevodau, 08-Civ-8343 (RJS) (S.D.N.Y.).
Under the terms of the Distribution Plan, the available funds will be distributed to shareholders who acquired and held BISYS stock during the period beginning on October 23, 2000 and ending on April 22, 2004), and suffered a loss on their investment, as calculated under the Plan.
The Plan will be administered by A.B. Data, the claims administration firm that served as the court-appointed claims administrator in the Class Action. Persons eligible to receive a distribution under the proposed Plan are persons who acquired BISYS shares during the Recovery Period, and who incurred a Net Recognized Loss, as defined under the Plan, with respect to their purchase of BISYS shares and (a) submitted a claim that was not deemed deficient in the Class Action; or (b) who opted out of the class in the Class Action.
The Commission’s complaint, filed May 23, 2007, alleged that BISYS violated the financial reporting, books-and-records, and internal control provisions of the Securities Exchange Act of 1934 by engaging in a variety of improper accounting practices that resulted in material overstatements of BISYS’s reported financial results by roughly $180 million in fiscal years 2001, 2002, and 2003.
As a result, the Commission alleged that BISYS filed annual and quarterly reports, and other documents, that materially misstated its results for the fiscal years ended June 30, 2001, 2002, and 2003, interim quarters during those fiscal years, and the quarters ended September 30, and December 31, 2003.
On July 18, 2007, the Court entered a final judgment against BISYS, to which BISYS consented without admitting or denying the allegations in the complaint, pursuant to which BISYS paid a total of approximately $25 million in disgorgement and pre-judgment interest in settlement of the case.
BISYS is now known as Citi Investor Services, Inc.