Tuesday, June 7, 2016

Wrongful Dismissal Lawsuit Alleges Improper Accounting Practices to Boost CU CEO's Pay

A former chief financial officer of Rock Hill, Connecticut-based Nutmeg State Financial Credit Union (NSFCU), as well as his top lieutenant, have filed a civil lawsuit against the credit union claiming they were fired in retaliation for communicating with regulators about what they believed were improper accounting practices at the credit union, according to the Hartford Business Journal.

The complaint alleges the credit union artificially inflated profits through earnings management to boost the pay of the credit union's CEO, John Holt.

According to the complaint, "[b]y pushing out the losses, … Holt was able to keep … NSFCU's profits artificially inflated, which allowed his bonus and SERP [supplemental executive retirement plan] to be funded, even in months when … NSFCU's profit targets would have fallen short, and also at the expense of proper reporting practices and against the interests of … NSFCU's members and the public in general."

The plaintiffs claim that earnings management included underfunding the credit union's allowance for loan and lease losses account and stretching out the cost of closing the credit union's East Windsor branch.

The plaintiffs allege that those alleged practices violated state and federal law and were inconsistent with Generally Accepted Accounting Principles.

The plaintiffs are asking for back pay, lost benefits, punitive and other damages, and legal costs and fees.

Read the story.

No comments:

Post a Comment

 

The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.