📋 Tender Overview
The Securities and Exchange Commission charged three executives of Mobile Alabama-based shipbuilder Austal USA LLC for orchestrating a fraudulent revenue recognition scheme that allowed its parent company to meet or exceed analyst expectations.The SEC alleges that from at least January 2013 through July 2016 Austal USAs former president Craig D. Perciavalle its current director of financial analysis Joseph A. Runkel and former director of the Littoral Combat Ships program William O. Adams engaged in a scheme to artificially reduce the cost estimates to complete certain shipbuilding projects for the U.S. Navy by tens of millions of dollars. The complaint alleges that Perciavalle Runkel and Adams knew that Austal USAs shipbuilding costs were rising and higher than planned but they directed others to arbitrarily lower the cost estimates to meet Austal USAs revenue budget and revenue projections.The complaint further alleges that Austal USAs parent company Australia-based Austal Limited prematurely recognized revenue and as a result met or exceeded analyst consensus estimates for earnings before interest and tax EBIT a key financial metric for the company.We allege that Austal USAs executives manipulated its financial results causing harm to U.S. investors in the securities of its parent company Austal Limited said Jason Burt Regional Director of the SECs Denver Regional Office. As the complaint articulates if the defendants had not fraudulently manipulated the cost estimates Austal Limited would have missed by wide margins analyst consensus estimates for EBIT.The SECs complaint filed in the U.S. District Court for the Southern District of Alabama alleges that Perciavalle Runkel and Adams violated the antifraud provisions of the Securities Exchange Act of 1934 and seeks disgorgement plus prejudgment interest civil money penalties and officer and director bars.The SECs investigation was conducted by Kimberly Steckling Kenneth Stalzer and Donna Walker and supervised by Ian Karpel Nicholas Heinke and Jason Burt. The litigation is being led by Sharan Lieberman and Christopher Martin and supervised by Gregory Kasper.
