UTStarcom Execs Pay $175,000 to Settle Claims

NEW YORK -- Two executives from UTStarcom Inc., a telecommunications firm, agreed to pay $175,000 collectively to settle claims that the company filed false financial reports, according to Securities and Exchange Commission filings, The Wall Street Journal reported Friday.

The SEC filed the settled action on Thursday after finding that between 2000 and 2005 UTStarcom, based in Alameda, Calif., improperly reported over $400 million in sales under applicable accounting principles related to revenue recognition. The SEC further found that the company failed to disclose transactions related to a third party, and did not correctly record compensation for employee stock options, according to the filing, the paper reported.

Hong Liang Lu, UTStarcom's chief executive, and Michael Sophie, the company's former chief financial officer, were notified of the weakness in internal controls at the company as early as 2003, but failed to establish adequate controls, according to the order issued on Thursday, the paper reported.

Lu and Sophie agreed to pay $100,000 and $75,000, respectively, in civil penalties, but did not admit nor deny allegations of wrongdoing. Under the settlement, UTStarcom also agreed to stop violating the applicable provisions of federal securities laws, the paper reported.

-- NYSSCPA.org News Staff

Posted on 5/2/08