PLANO, Texas - A 73-year-old former SEC accountant from Denton, Texas, has entered into a settlement concerning conflict of interest allegations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Edmund W. Bailey, Jr., now residing in Mesquite, Nevada, signed a civil settlement agreement today resolving federal conflict of interest allegations arising from an expert report he prepared after his retirement from the Securities and Exchange Commission (SEC) in 2012.
According to court documents, in March 2012, Bailey, a Senior Associate Chief Accountant, retired from the SEC. On June 3, 2013, Bailey prepared and submitted an expert report to KPMG, LLP, conveying his expert opinion as to whether certain KPMG policies and procedures were inconsistent with SEC auditor independence rules. KPMG then submitted the report to the SEC as part of a “Wells Submission," which is information provided to the SEC by a potential defendant advocating why the agency should not institute an enforcement action in a particular matter. The United States alleged that Bailey’s expert report constituted a prohibited communication to the SEC in violation of United States post-employment conflict of interest restrictions under 18 U.S.C. § 207. Bailey has agreed to pay a civil fine of $40,000 (out of an applicable maximum of $50,000) to resolve the allegations. Bailey has denied any allegations of wrongdoing.
Today’s settlement marks the second time in four years that the U.S. Attorney’s Office for the Eastern District of Texas has pursued and resolved conflict of interest allegations against senior SEC personnel under 18 U.S.C. § 207. The prior 2012 press release can be located at http://www.justice.gov/archive/usao/txe/News/2012/edtx-barasch-011312.html.
“The public expects that its federal employees will honor and abide by the stringent conflict of interest prohibitions and ethical standards required by law," said U.S. Attorney Bales. “Our office intends to ensure that those expectations are met."
This case was investigated by the Securities and Exchange Commission Office of Inspector General and the U.S. Attorney’s Office for the Eastern District of Texas. The settlement was negotiated by Assistant U.S. Attorneys Randi Russell and Joshua Russ. The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Source: U.S. Department of Justice, Office of the United States Attorneys
