Former Kmart executives charged with misleading investors
Tuesday, August 23rd 2005, 10:00 am
By: News On 6
DETROIT (AP) _ The Securities and Exchange Commission on Tuesday accused two former Kmart Corp. executives of misleading investors about the company's financial condition before the retailer's bankruptcy.
The charges filed in U.S. District Court in Detroit alleged that former chairman and CEO Charles C. Conaway and former Chief Financial Officer John T. McDonald were responsible for disclosures that were ``materially false and misleading.''
The disclosures were part of regulatory filings Kmart made for the third quarter and nine months ended October 31, 2001, and in an earnings conference call with analysts and investors, the SEC said.
Kmart filed for bankruptcy on Jan. 22, 2002.
Kmart spokesman Stephen Pagnani said the company would have no comment on the charges.
``Investors are entitled to both accurate financial data and an accurate description of the story behind the numbers,'' Peter H. Bresnan, SEC's associate enforcement director, said in a statement.
``Kmart's senior management failed to honestly inform investors that Kmart faced a liquidity crisis in the third quarter of 2001, how the company's own ill-advised action had caused the problem and what steps management took to respond to it,'' he said.