SEC Reaffirms Fraud Charges Against Execs

The Securities and Exchange Commission, operating with a full slate of commissioners, reaffirmed fraud charges against former Waste Management Inc. executives that first were lodged by a single commissioner.

The SEC revealed its action in a letter Aug. 21 to the federal judge presiding over the Waste Management case in Chicago.

The six former Waste Management executives are contesting the legality of the charges on grounds they were levied by a single commissioner, Isaac Hunt, violating federal rules. When Hunt voted in February, the SEC had only three commissioners.

Two of them, Chairman Harvey Pitt and Commissioner Cynthia Glassman, had conflicts of interest and sat out the vote, leaving Hunt to bring the charges.

After all five SEC seats were filled, commissioners again voted in August.

The agency had argued in court that Hunt’s vote was proper because he was acting as a duty officer when he approved the enforcement action.

The SEC alleges that the six executives failed to report expenses on financial statements and postponed costs while they filed false accounts from 1992 to 1997.

The agency accused the men of inflating Waste Management’s profit by $1.7 billion in an accounting fraud that cost shareholders about $6 billion. The executives illegally made $28.5 million, the SEC alleged.