SEC v. Scott A. Livengood, John W. Tate, and Randy S. Casstevens

SEC Complaint against Scott A. Livengood, John W. Tate, and Randy S. Casstevens


The Securities and Exchange Commission announced that on March 4, 2009, it filed a Complaint in the United States District Court for the Middle District of North Carolina against three former executives of Krispy Kreme Doughnuts, inc.: Scott A. Livengood,Chairman, President, and Chief Executive Officer, John W. Tate, Chief Operating Officer, and Randy S. Casstevens, Chief Financial Officer.

The SEC Complaint alleges that between February 2003 and May 2004, Krispy Kreme inflated its quarterly and annual earnings and omitted to disclose the impact of certain adjustments to report quarterly earnings per share that exceeded its previously announced EPS guidance by one cent. The Company under-accrued or reversed previously accrued incentive compensation expense pursuant to Krispy Kreme’s Senior Executive Incentive Compensation Plan. The under-accruals and reversals were inconsistent with the formal incentive plan and were performed to inflate the Company’s earnings to exceed the Company’s guidance by one cent. The Complaint alleges that the defendants understood the existence and significance of the under accrual and the reversals to the Company’s earnings, yet failed to disclose either to the public. Livengood and Casstevens also signed and certified Krispy Kreme filings that misstated the Company’s financial performance.

The Complaint also alleges that each of the defendants sold stock following the Company’s earnings announcement for the second quarter of fiscal 2004.

In the interest of full disclosure, I used to own some Krispy Kreme stock, lost a chunk of the investment and received a paltry settlement as part of the securities class action.

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Reference Info:Pleadings | Federal, 4th Circuit, Maryland | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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