SiliconBeat

Two executives with UTStarcom, the Alameda telecommunications company that boasts providing “a world of better communications”, agreed to pay fines to help settle an SEC action against the men and the company in the wake of repeated restatements of the company’s financial results.

Without admitting or denying the allegations, Chief Executive Hong Liang Lu, of San Ramon, and former Chief Financial Officer Michael Sophie, of Pleasanton, agreed to pay penalties of $100,000 and $75,000, respectively, as part of the settlement.

UTStarcom restated its financial filings three times since 2005. The company prematurely recognized over $400 million in revenue between 2000 and 2005, according to the SEC, that were subject to undisclosed side agreements or contract modifications that should have disqualified the the revenue from being recognized at that time.

The company also improperly accounted for stock option compensation expenses, and failed to disclose related party transactions with a company controlled by UTStarcom insiders, according to the SEC.

“After being notified of accounting weaknesses by the company’s outside auditor, UTStarcom’s CEO and CFO did little to ensure that the company’s internal controls were adequate and effective,” said Marc Fagel, Co-Acting Regional Director of the SEC’s San Francisco office. “Today’s action confirms that, even in the absence of fraud, public company executives must take responsibility for the company’s financial reports.”