SEC wants to question ex-Cabletron board member


The U.S. Securities and Exchange Commission wants to question a former board member of Cabletron Systems in its civil securities fraud trial.Cabletron, now defunct, was once the state’s largest employer. The Rochester-based company was co-founded by, former Gov. Craig Benson, who is not the board member the SEC seeks to depose.Last week, the SEC included in its discovery list an unnamed member of the Cabletron board’s compensation committee.The SEC originally charged that 10 former executives of Cabletron and/or its Enterasys spinoff engaged in a scheme to inflate revenue during the spinoff.A jury had previously convicted four of the civil defendants on criminal charges stemming from such activity at Enterasys. They are in federal prison, and have not fought the civil charges.Prosecutors eventually ended up dropping criminal charges against a fifth defendant, but the SEC is pursuing civil charges. The remaining five civil defendants -- never charged with criminal activity -- also are fighting the civil charges. They include Piyush Patel, Benson’s successor as chief executive of Cabletron.A federal judge has thrown most of the SEC charges, so the case has boiled down to a few allegedly fraudulent transactions, but a trial is more than a year away, and both sides said they would be willing to enter mediation to settle the matter.In the meantime, the long process of discovery is under way. While the judge originally imposed a limit of 10 depositions, the SEC is seeking more. In addition to the Cabletron board member, the SEC wants to question seven former employees of Cabletron, including Romulus Pereira, the first chief executive of Riverstone Networks, another Cabletron spinoff.The SEC also wants to question under oath two Cabletron/Enterasys auditors and representatives from some 14 companies that were allegedly used by Cabletron and Enterasys to fraudulently prop up revenue. The defendants argue that the SEC already has access to enough information, including reams of documents and testimony in the criminal trial.While the SEC said the trial should last two weeks, the defendants say that it could last as long as two months. They propose it begin in February 2012.A pretrial conference is scheduled for Dec. 2. – BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW
Edit Module
Edit ModuleShow Tags
Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags