On Tuesday the Securities and Exchange Commission (SEC) announced a settlement regarding charges filed against healthcare company Baxter International Inc. and Baxter’s former treasurer and assistant treasurer, Scott Bohaboy and Jeffrey Schaible.
The SEC, per its press release, accused Baxter of deliberately subverting agency provisions from 1995 to 2019 by using a convention to convert non- U.S. dollar denominated transactions, assets, and liabilities on its financial statements. This practice was not in accordance with Generally Accepted Accounting Principles and gave the appearance of gains even if the transaction would normally be considered a loss, per the agency. Starting in 2009, the SEC also accused Baxter of deliberately creating intra-company transactions solely for the purpose of generating foreign exchange accounting gains.
Baxter’s former assistant treasurer, Jeffrey Schaible, was accused of being primarily responsible for and directing other employees to conduct these transactions. Baxter’s former treasurer, Scott Bohaboy, was accused of not inquiring into the transactions that consistently generated gains, and also of not investigating if the gains that were generated were permissible per accounting principles.
“Baxter, Bohaboy, and Schaible consented to cease and desist from future violations. Bohaboy consented to pay a $125,000 civil penalty. Schaible consented to pay a $100,000 civil penalty, disgorgement of $76,404 and prejudgment interest of $12,955. The settlement creates a fair fund for distribution of settlement proceeds to harmed investors.”
