The Securities and Exchange Commission charged four former executives at a British subsidiary of Warsaw’s Symmetry Medical with accounting fraud and ordered current executives to pay back profits based on earnings stemming from before the alleged fraud was discovered.

Multiple documents were filed Monday in the U.S. District Court in South Bend. The complaint charges four from the United Kingdom with years of pervasive fraud when they led Sheffield, England-based Symmetry Medical Sheffield, formerly known as Thornton Precision Components.

Also among the paperwork is an agreement between the SEC and current Symmetry Medical President of Business Development Brian S. Moore to reimburse Symmetry for bonuses, incentive pay and stock profits he garnered during the time of the alleged fraud.

That agreement, subject to approval by a federal judge, will result in $450,000 in reimbursements from Moore, according to a release from the SEC.

Symmetry’s current chief financial officer, Fred Hite, agreed to pay a $25,000 penalty to the SEC and reimburse $185,000 to Symmetry for failing to provide an internal audit status report about the Sheffield subsidiary to Symmetry’s audit committee in the summer of 2006, according to documents.

The SEC’s complaint grew out of Symmetry’s own investigation into accounting irregularities at the U.K. plant in 2007. There are no allegations of any issues related to the company’s financial reporting since 2007, according to Symmetry’s president and CEO Thomas J. Sullivan.

“We have been cooperating with the SEC … since 2007,” Sullivan said.

The seven-claim complaint charges Richard J. Senior, Matthew Bell, Lynne Norman and Shaun Whiteley, all of the U.K., with violations of the federal securities acts. They no longer work for the company.

According to court documents, the scheme at what was then Thornton Precision Components began in 1999, four years before the company was acquired by Symmetry and five years before Symmetry offered its stock for sale publicly for the first time.

Those named allegedly generated premature invoices for products not complete, recorded fictional sales, created false documentation, and manipulated inventories.

Then, in 2003, Thornton Precision Components passed the phony information on to Symmetry, which included it in their own financial reports to investors.

The fraud stopped only when a manager at the subsidiary in England told Symmetry officials, in September 2007, according to court documents.

When Symmetry restated its earnings from that period, the numbers dropped anywhere from 39 percent to 421 percent. In the fiscal year 2005, Symmetry initially reported $31.8 million in income. In reality, the company lost $9.9 million, court documents say.

“The fraud caused Symmetry’s share price to be fraudulently inflated by as much as 20.4 percent, with a corresponding loss to Symmetry and its investors … of as much as $120 million in market capitalization,” SEC attorneys allege in the complaint.

Two auditors, Christopher J. Kelly and Margaret Hebb, employees at the U.K. branch of the accounting firm Ernst & Young, were found to have engaged in improper professional conduct by failing to properly audit Thornton Precision Components. As a penalty, the two are barred from practicing before the SEC for at least two years, according to SEC documents.

In a written statement, Symmetry board chairman Craig Reynolds said that the settlement is consistent with the fraud that was concealed from Symmetry’s management.

“We note that the SEC expressly recognized the remedial acts that were promptly undertaken by the company,” Reynolds said in the statement. “We are glad that this matter is resolved on terms that we believe are in our shareholders’ best interests, including the lack of any penalty imposed on the company.”

Sullivan expressed strong support for Hite.

“There is no allegation that Mr. Hite or Mr. Moore knew of or participated in the wrongdoing,” Sullivan said. “We are now able to turn our full focus and attention on our business. We are looking forward to working with (Hite) to increase the value of our company for our shareholders.”

rgreen@jg.net