A Chicago-based gas company’s CFO and other senior executives are being
pursued by the SEC for financial fraud between 1999 and 2002.
The SEC stated yesterday that former executives of the Nicor gas company
engaged in, or approved, improper transactions and misrepresented Nicor’s gas
inventory in order to meet earnings targets and increase the company’s revenues
under a performance-based utility rate plan.
The regulator has named the chairman, CEO and president Thomas Fisher, former
CFO and executive vice-president Kathleen Halloran, and former treasurer and
vice-president George Behrens, in civil filings.
‘This action against three senior officers of Nicor demonstrates the
Commission’s continued commitment to holding individual decision-makers
accountable for their conduct when it results in fraudulent financial
statements,’ said SEC director of enforcement, Linda Thomsen.
Director of the SEC’s regional office in Chicago, Merri Jo Gillette, said the
SEC will not tolerate ‘accounting ploys’.
‘Fisher, Halloran and Behrens engaged in a scheme to manipulate Nicor’s
earnings through fraudulent transactions and mislead investors by making
improper disclosures regarding Nicor’s financial performance,’ said Gillette.
‘This case, like others, shows that the Commission will not tolerate accounting
ploys and misleading disclosures by senior officers who are intent on making
The SEC alleges that Fisher, Halloran and Behrens:
? participated in 1999 in devising a method by which Nicor could profit by
accessing its low-cost last-in, first-out (LIFO) layers of gas inventory;
? engaged in or approved improper transactions, and made material
misrepresentations in financial statements and documents filed with the
? failed to disclose material information regarding Nicor’s rigged reductions
in gas inventory levels that enabled it to improperly manipulate its earnings a
nd to increase Nicor’s revenues under a performance-based utility rate plan;
? materially understated Nicor’s expenses during the first and second
quarters of 2001 by improperly bundling a weather-insurance contract with an
agreement to supply gas to Nicor’s insurance provider at below-market prices;
? caused the losses on the supply agreement with the insurance provider to be
improperly charged to Nicor’s utility customers;
? allowed improper transactions that enabled Nicor to understate its expenses
and to manipulate its earnings to achieve its earnings targets.
As a result of the manipulative scheme, the SEC alleges, Nicor materially
overstated its reported income for the years ending 2000 and 2001, and for each
of the quarters within those years and the financial statements filed with those
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