Sycamore, 3 ex-executives settle SEC charges

The telecommunications equipment maker was not fined under the settlement with the Securities and Exchange Commission, which cited its cooperation in the agency's investigation. The former executives, however, are paying a total of more than $660,000.

Chelmsford, Mass.-based Sycamore Networks neither admitted nor denied wrongdoing under the accord, but did agree to refrain from future violations of the securities laws.

In a civil lawsuit filed in federal court in Boston, the SEC alleged that two of the executives--former chief financial officer Frances Jewels and former director of financial operations Cheryl Kalinen--fraudulently backdated stock option grants to obtain more favorable prices for Sycamore employees. Jewels and Kalinen personally benefited from the deception, misled the company's auditors and shareholders, and failed to disclose nearly $250 million in options expenses in financial statements between 2000 and 2005, the SEC said.

Sycamore's former director of human resources, Robin Friedman, was accused of helping to mislead the company's auditors.

The former company executives also did not admit or deny wrongdoing, but did agree to refrain from future violations of the securities laws. In addition, Jewels agreed to a five-year ban against serving as an officer or director of any public company, or as an attorney or accountant for any. Friedman will be barred for two years from practicing as an attorney for a public company.

Jewels agreed to pay a $230,000 civil fine, to return to the company $190,000 in cash bonuses received during the period of the alleged violations, and to pay back $30,000 of allegedly ill-gotten gains from the sale of Sycamore stock plus interest.

Kalinen is paying a $150,000 fine and restitution of $28,000 of allegedly ill-gotten gains. Friedman is paying a $40,000 fine.

Sycamore President and Chief Executive Daniel E. Smith said the company is "pleased that this matter with the SEC is now concluded."

Michael Gardener, an attorney for Jewels, said his client "is pleased to have this behind her without any need for litigation."