BISYS Reveals Proposed $25.1M SEC Deal on Financial Restatements

The BISYS Group announced Friday that it and staff members of the US Securities and Exchange Commission (SEC) have hammered out a $25.1 million agreement in principle over the SEC investigation into company financial restatements in 2004 and 2006.

A news release from BISYS, already the target of a settled SEC fund payment inquiry, said the SEC staff has agreed to recommend the commission approve the latest deal. The news release said the deal – which calls for the $25.1 million disgorgement and interest payment – must also be approved by a federal judge to which the SEC would file a complaint and the simultaneous settlement.

The announcement gave few details but indicated that the probe had centered around restatement of financial results on August 10, 2004 and April 26, 2006

Under the terms of the proposed deal, BISYS said it has agreed not to further violate “the reporting, books and records and internal controls provisions of the federal securities laws and related SEC rules.”

“We have been cooperating fully with the SEC staff throughout the course of their investigation and are pleased to have reached this proposed settlement. As an organization, we are committed to holding ourselves to the highest ethical standards,” said Robert Casale, chairman, and interim CEO and president of BISYS, in the news release. “We believe that this settlement is in the best interest of BISYS and its shareholders and will allow the company to continue to focus on growing its businesses and pursuing opportunities to maximize shareholder value.”

BISYS said it now estimates that its fiscal year 2006 Form 10-K will be filed in early December 2006. Bruce Dalziel, chief financial officer of BISYS, noted, “Management and the Board have made a concerted effort to enhance financial controls throughout the organization. We are still catching up onour Sarbanes-Oxley and audit efforts for fiscal year 2006, with an emphasis on quality rather than speed. We appreciate our investors’ patience as we seek to establish a world class control environment at BISYS.”

The earlier BISYS fund payment probe centered on whether it used mutual fund fees to pay for the marketing and distribution of the funds. The investigation was closed with a charge of aiding and abetting. The SEC is conducting a wider probe of whether independent contractors paid rebates to mutual-fund companies in an effort to snag contracts for jobs such as producing shareholder reports and prospectuses.