The former finance director of CIRCOR International Inc., Nicholas Bowerman, has been accused by the US Securities and Exchange Commission (SEC) of engaging in fraudulent practices that led to misleading financial disclosures by the company. The allegations date back to 2019 and extend through 2021, impacting CIRCOR’s public financial statements. The SEC has filed fraud charges against Bowerman, emphasizing the importance of accurate and transparent financial reporting practices in the corporate world.
In a complaint filed by the SEC, Bowerman is alleged to have manipulated Pipeline Engineering’s internal financial records, resulting in inaccurate figures being included in CIRCOR’s consolidated financial statements. His deceptive actions included manipulating account reconciliations, falsifying certifications, fabricating bank documents, and misleading senior management and external auditors. These practices led to overstated financial performance by millions of dollars for fiscal years 2019 and 2020, as well as the nine-month period ending on October 3, 2021.
The SEC’s investigation also exposed deficiencies in CIRCOR’s internal accounting controls, allowing Bowerman’s misconduct to go undetected for an extended period. The company was found in violation of federal securities laws concerning financial reporting, books and records, and internal accounting controls. In response to the discovery of the fraudulent activities, CIRCOR took immediate action by self-reporting the violations to the SEC, launching an internal investigation, and implementing remedial measures to address the internal control failures.
CIRCOR’s cooperation with the SEC throughout the investigation played a significant role in mitigating enforcement actions against the company. By strengthening internal accounting controls, hiring experienced finance personnel, and cancelling compensation to a former executive officer, CIRCOR demonstrated a commitment to rectifying the identified deficiencies. The SEC acknowledged the company’s proactive response and refrained from seeking civil penalties against CIRCOR.
While CIRCOR has settled its case with the SEC, Bowerman faces severe legal consequences as the SEC has filed a complaint against him in the U.S. District Court for the District of Massachusetts. The charges against Bowerman include violations of multiple provisions of federal securities laws, with the SEC seeking injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, and civil penalties. These charges reflect the gravity of Bowerman’s alleged misconduct, which compromised the integrity of CIRCOR’s financial disclosures and harmed investors who relied on the company’s public filings.
As part of the final order against CIRCOR, the company has agreed to cease and desist from future violations of the charged provisions of securities laws. The case serves as a reminder of the consequences of fraudulent financial practices and underscores the importance of maintaining accurate and transparent financial reporting standards in the corporate sector.