SEC Charges Austal USA Executives with Orchestrating Fraudulent Revenue Scheme

The Securities and Exchange Commission charged Craig D. Perciavalle, Joseph A. Runkel, and William O. Adams, three executives of Austal USA LLC, with orchestrating a fraudulent revenue recognition scheme. The scheme entailed artificially lowing cost estimates on certain Navy shipbuilding projects to meet their parent company’s revenue budget and revenue projections. As a result, parent company Australia-based Austal Limited was able to prematurely recognize revenue and meet or exceed analyst consensus estimates for earnings before interest and tax (EBIT). The SEC's complaint alleges the executives violated the antifraud provisions of the Securities Exchange Act and seeks disgorgement plus prejudgment interest, civil money penalties, and officer and director bars.