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Goodyear warned of possible SEC sanctions

The Securities and Exchange Commission has told Goodyear Tire & Rubber Co. that SEC staff expects to recommend enforcement action against the largest U.S. tire maker for accounting errors disclosed two years ago.
/ Source: The Associated Press

The Securities and Exchange Commission has told Goodyear Tire & Rubber Co. that SEC staff expects to recommend enforcement action against the largest U.S. tire maker for accounting errors disclosed two years ago.

The SEC's warning, known in regulatory parlance as a Wells Notice, said the pending action covered alleged violations of the Securities and Exchange Act of 1934 and its accounting and record keeping requirements, Goodyear said Tuesday.

Goodyear said it expects to have the opportunity to respond before the SEC staff makes a formal recommendation for civil or administrative action.

The company also said it has been informed that Wells Notices were issued to a former chief financial officer and a former chief accounting officer of the company.

"Goodyear and its former officers are continuing to cooperate with the SEC in connection with this matter," the tire maker said.

Goodyear announced Oct. 22, 2003, that accounting system errors forced it to lower net income since 1998 by as much as $100 million. Goodyear said a computerized accounting system implemented in 1999 caused errors with its internal billing system, resulting in the mistakes.

The system that caused the errors was used to track the purchase of equipment for foreign factories.