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Wednesday June 30, 5:37 pm Eastern Time
(adds byline, Grace statement grafs 5,6, details)
By Peter Ramjug
WASHINGTON, June 30 (Reuters) - W.R. Grace & Co. (NYSE:GRA - news), a leading packaging and chemicals company, on Wednesday agreed to set up a $1 million education fund as part of a settlement with the U.S. Securities and Exchange Commission in a case alleging income manipulation.
Former senior executives of the Boca Raton, Fla.-based company were accused of misleading investors from 1991 to 1995 by manipulating the reported income and growth rates of W.R. Grace and its Health Care Group, the SEC said in announcing the settlement.
The company agreed to establish the fund to further awareness and education relating to financial statements and Generally Accepted Accounting Principles (GAAP), regulators said.
In addition, W.R. Grace, which did not admit or deny the SEC's accusations, agreed to a cease and desist order barring it from further securities laws violations.
Grace said in a statement it was settling the case ``because we think it is in the best interests of our employees and our shareholders to put this matter behind us and move forward ....''
``The issues involved in this case relate to things that happened several years ago. Grace today is a different company with a new leadership team in place.''
Regulators contended that W.R. Grace, through former senior executives of the company and at a former unit, National Medical Care Inc., used excess reserves that were not established or maintained in line with GAAP to bring the reported earnings of Grace's Health Care Group in line with the company's targets, said the SEC.
The amount of the excess reserves fluctuated but ranged to more than $60 million.
The SEC also settled proceedings against two partners of Pricewaterhouse Coopers LLP, the giant accounting firm, who participated in the audits of W.R. Grace's consolidated financial statements. The partners also did not admit or deny wrongdoing.
The top enforcement official at the SEC, Richard Walker, said: ``Accurate financial reporting is the cornerstone of our capital markets. This case makes plain that we will not tolerate efforts to play fast and loose with the accounting rules to meet earnings targets.''
W.R. Grace's stock price is down 3/16 to 18-13/16 in afternoon trading on the New York Stock Exchange.
| More Quotes and News: | W.R. Grace & Co (NYSE:GRA - news) |
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