COMMISSION BRINGS FOUR ACTIONS BASED ON FINANCIAL FRAUD

The Commission brought four actions centered on a years long financial fraud at Sheffield, England based Symmetry Medical Sheffield LTD f/k/a Thorton Precision Components, Ltd or TPC. The company is the English subsidiary of Symmetry Medical, Inc., a U.S. manufacturer of prosthetics, medical implants and instruments as well as specialized products for the aerospace industry. One action was brought against the senior executives who orchestrated the fraud. A second names as Respondents the company and its former CFO while a third action, based on SOX 304, was brought against the former CEO and president. The fourth named as Respondents the engagement partner and manager on the audits of the company.

The fraud was the product of a group of senior executives which included Richard Senior, then VP for European Operations, Matthew Bell, then Finance Director, Lynne Norman, then Controller, and Shaun Whiteley, then the Account Manager. The four executives systematically engaged in a fraudulent scheme to inflate the financial results of TPC by understating expenses and overstating assets and revenues. The scheme began as early as 1999, four years before TPC was acquired by Symmetry and five years before the latter’s IPO. Mr. Senior is alleged to have orchestrated the scheme by enlisting TPC’s finance staff.

The key elements of the scheme, which varied over time, included:

• Premature revenue recognition over a four year period beginning in 1999;

• Recording fictitious or provisional sales beginning in 2004 and continuing through 2007;

• Creating false documentation to support the fictitious revenue;

• Understating the cost of revenues and manipulating inventory; and

• Other accounting manipulations.

As a result of the scheme net income was overstated for fiscal 2004 by 39%, 2005 by 421%, 2006 by 30%, for the first quarter of 2007 by 131% and for the second quarter of 2007 by –6.4%. In April 2008 Symmetry restated its financial statements for fiscal years 2006, 2006 and the first two quarters of 2007.

SEC v. Senior, Civil Action No. 3:12CV60 (N.D. Ind. Filed Jan 30, 2012) is the action against the four executives involved. The complaint alleges violations of Securities Action Section 17(a) and Exchange Act Sections 10(b), 13(a), 13(b)(2)(B) and 13(b)(5). Each defendant consented to the entry of a permanent injunction, without admitting or denying the allegations in the complaint, based on the sections they were alleged to have violated. Messrs Senior, Bell and Norman will also be barred from serving as an officer or director of a public company. Mr. Bell agreed to pay disgorgement of $136,209 along with prejudgment interest but payment is waivered based on his financial condition. Mr. Senior’s consent defers the resolution of the monetary component of the case pending the completion of assets discovery. Finally, Messrs. Bell, Norman and Whitley also agreed to be barred from appearing or practicing before the Commission as an accountant.

In the Matter of Symmetry Medical, Inc., Adm. File No. 3-14723 (Jan. 30, 2012) is a proceeding against the company and its CFO and Senior Vice President, Fred Hite. The action centers on the same facts alleged in the complaint against the four executives. To resolve the action the company consented to a cease and desist order based on Exchange Act Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B). Mr. Hite consented to the entry of a cease and desist order based on Exchange Act Section 13(b)(5) and SOX Section 304(a). In addition, he agreed to pay a civil penalty of $25,000 and to reimburse the company for $185,000 in bonuses and other incentive based or equity based compensation and for stock sale profits. That obligations will be satisfied by paying to the company a combination of cash and vested stock that, collectively, totals $185,000 in value with the stock portion thereof not to exceed $85,000.

SEC v. Moore, Civil Action No. 3:12 CV 61 (N.D. Ind., Filed Jan 30, 2012) is an action against Brian Moore, a U.K. citizen who served as the CEO and president of Symmetry from June 2003 and January 2011. The case is based on SOX Section 304 and does not allege that Mr. Moore knew of the fraud at the company. Mr. Moore resolved the matter by agreeing to the issuance of a final judgment ordering him to reimburse $450,000 to Symmetry which represents certain discretionary compensation paid to him in during the 12 month period following the restated financials.

In the matter of Christopher Kelly, ACA, Adm. Proc. File No. 3-14724 (Jan. 30, 2012) is an a proceeding which names as Respondents two Associate Chartered Accountants in the U.K., Christopher Kelly and Margaret Hebb who were, respectively, the former audit partner and audit manager on Ernst & Young UK LLP’s audits of TPC for 2004 through 2006. The Order concludes that the two accountants engaged in improper professional conduct with respect to the engagements. The matter was resolved with the entry of an order by consent suspending each Respondent from appearing or practicing before the Commission as an account with a right to reapply after two years.