Ex-Riverstone execs seek SEC deal

Former Riverstone Networks executives are attempting to settle civil securities fraud charges, according to court documents filed in the case last week.

The Securities and Exchange Commission has charged the six executives with inflating revenue when the company was spinning off from Cabletron Systems in 2001. But the case was put on hold after four of the defendants gave a verbal offer to settle following a June 8 mediation, according to the filing.

The U.S. District Court in Northern California — where Riverstone relocated its headquarters after the Cabletron spinoff – ordered the case be put on hold for two months, since that’s how long it is expected to take for the SEC to review the defendants’ settlement offers.

The four former executives are the former chief executive officer, Romulus Pereira, and former chief financial officer, Robert Stanton, William McFarland, former vice president of finance, and Lori Cornmesser, former director of sales operations.

The other defendants — Andrew Feldman, former vice president of marketing, and L. John Kern, vice president of sales — had already offered to settle following the amended complaint, which quotes e-mails that may be particularly damaging to Kern, who reported to Pereira.

Piyush Patel -CEO of Cabletron at the time of the spinoff and later chairman of Riverstone’s board – has not been charged in the Riverstone civil complaint. But he is one of the defendants in another SEC civil complaint containing similar allegations involving the same time period. That one was filed against 10 former executives from Enterasys Networks, which also was spinning off from Cabletron in 2001.

Patel was picked by his predecessor, Cabletron co-founder Craig Benson, to succeed him as CEO. Benson, the company’s largest stockholder at the time, went on to serve a term as governor of New Hampshire. He has not been implicated in any of the civil or criminal charges. – BOB SANDERS

Categories: News