Austal USA Settles Accounting Fraud Charges With SEC

Alabama Shipbuilder to Pay $4.5 Million Penalty

Allegations of False Claims and Inflated Revenue

Austal USA, a leading shipbuilder headquartered in Mobile, Alabama, has agreed to pay a $4.5 million penalty to settle accounting fraud charges brought by the Securities and Exchange Commission (SEC).

The SEC alleged that Austal USA inflated its revenue and made false claims about its financial performance in order to meet Wall Street expectations and secure additional financing.

According to the SEC, Austal USA recognized revenue from contracts before they were completed and understated its costs, resulting in an overstatement of its financial performance.

• The SEC's investigation found that Austal USA inflated its revenue by approximately $150 million over a three-year period.
• The company also understated its costs by approximately $60 million, resulting in an overstatement of its gross profit.

The SEC's complaint alleges that Austal USA's accounting fraud violated the anti-fraud and reporting provisions of the federal securities laws.

In addition to the penalty, Austal USA has agreed to cease and desist from future violations of the federal securities laws and to retain an independent compliance consultant to review its accounting practices.

SEC Enforcement Actions Against Accounting Fraud

The SEC has been cracking down on accounting fraud in recent years, bringing a number of high-profile enforcement actions against companies that have inflated their financial performance.

In 2021, the SEC settled accounting fraud charges with General Electric (GE), which agreed to pay a $20 million penalty.

The SEC also brought accounting fraud charges against Toshiba in 2015, which resulted in the company paying a $1.4 billion penalty.

Consequences of Accounting Fraud

Accounting fraud can have serious consequences for companies and their investors.

Companies that engage in accounting fraud may be subject to:

• SEC enforcement actions
• Civil lawsuits
• Criminal prosecution

Investors who purchase the securities of companies that engage in accounting fraud may lose their investment if the company's financial performance is not as strong as it appears.

Accounting fraud can also damage the reputation of a company and make it more difficult to attract new investors and customers.

Conclusion

Austal USA's settlement with the SEC is a reminder that accounting fraud is a serious offense with significant consequences.