The Securities and Exchange Commission today announced fraud charges against Nicholas Bowerman, a former finance director of CIRCOR International Inc., a formerly publicly traded technology manufacturer. The SEC alleges that Bowerman’s fraud led to the company making misleading statements to the public about the company’s financial performance from 2019 through 2021. The SEC also announced related settled internal accounting charges against CIRCOR.
Bowerman worked at CIRCOR’s U.K.-based business unit, Pipeline Engineering. According to the SEC’s complaint against Bowerman, between 2019 and 2021, Bowerman manipulated CIRCOR’s internal accounting records by falsifying Pipeline Engineering’s financial results before they were included in CIRCOR’s consolidated financial statements. The complaint further alleges that Bowerman concealed his misconduct by manipulating account reconciliations, falsifying certifications, fabricating bank confirmation documents, and misleading CIRCOR’s management and independent auditors. The SEC’s separate order against CIRCOR finds that the company failed to devise and maintain sufficient internal accounting controls concerning financial statement preparation, reconciliation processes, and access to bank accounts. Because of these deficiencies, CIRCOR was unable to prevent Bowerman’s fraud and, as a result, overstated by millions of dollars its performance for fiscal years 2019 and 2020 and the nine months ending October 3, 2021.
According to the SEC’s order, the SEC did not seek a civil penalty against CIRCOR because CIRCOR self-reported its financial reporting violations to the SEC shortly after commencing an internal investigation and thereafter provided substantial cooperation to the staff, including providing detailed examples of Bowerman’s unsupported and unauthorized adjustments, summarizing interviews of witnesses located outside the United States, and making CIRCOR employees and external forensic accountants available for interviews. CIRCOR also promptly implemented remedial measures, which included strengthening its internal accounting controls, hiring additional experienced finance and accounting personnel, and canceling compensation scheduled to be paid to a former executive officer.
“While this matter involves serious violations of the securities laws, once the company became aware of the violations, it promptly self-reported, cooperated, and remediated the gaps in its accounting systems,” said Nicholas P. Grippo, Director of the SEC’s Philadelphia Regional Office. “As also reflected in other recent Commission resolutions, this kind of response by a corporate entity can lead to significant benefits including, as here, no penalty.”
The SEC’s complaint, filed in the U.S. District Court for the District of Massachusetts, charges Bowerman with violating the antifraud, financial reporting, books and records, and internal accounting controls provisions of the federal securities laws and seeks injunctive relief, disgorgement with prejudgment interest, and civil penalties.
The SEC’s order against CIRCOR finds that CIRCOR violated the financial reporting, books and records, and internal accounting controls provisions of the federal securities laws. Without admitting or denying the SEC’s finding, CIRCOR agreed to cease and desist from further violations of the charged securities laws.
The SEC’s investigation was conducted by Christine R. O’Neil, Samika N. Osbourne, and Brian R. Higgins, and supervised by Brendan P. McGlynn, all of the Philadelphia Regional office. The SEC’s litigation against Bowerman will be conducted by Judson T. Mihok and supervised by Gregory R. Bockin, also of the Philadelphia Regional Office.
