CSC Dealt Huge Break By SEC In Accounting Fraud Case: Report

CSC has been dealt a huge break in its courtroom battle with the Securities and Exchange Commission in its long-running accounting fraud case.

The SEC is backpeddling from its original proposal of a $190 million settlement offer and is looking to propose a $100 million penalty instead, according to a recent report from The New York Times. Additionally, the SEC is withdrawing its demand for CSC to admit to any wrongdoing. The SEC proposal of lesser punishments was made with the intention of breaking a backroom stalemate within the agency. Unless the talks fall through, the report indicates, an announcement is expected as soon as this week.

Spokespeople for both the SEC and CSC declined to comment on the case.

[Related: 10 Unanswered Questions About The CSC Split]

The case against CSC has been dragging on for years. It first gained traction in 2011, when the solution provider hired law firm Cadwalader, Wickersham & Taft to carry out an internal investigation on the accounting fraud accusations -- the results of which were turned over to the SEC. The SEC then ruled that CSC had violated anti-fraud and booking provisions of securities laws. CSC is No. 4 on the 2014 CRN Solution Provider 500 list.

The New York Times reports that the two sides have been close to an agreement multiple times in the past year, but the latest snag comes as the SEC has come across a conflict-of-interest situation within its higher ranks. SEC Chairwoman Mary Jo White would typically cast the deciding vote to end any internal debate; however, she was forced to recuse herself from this case because her husband is a partner at a law firm that once represented CSC in this very case.

Because of this, she cannot rule on any conflicting issues the SEC has internally, including whether to penalize a former controller of the company, a former CEO and a former CFO, The New York Times reports.

To say CSC is no stranger to the courtroom would be an understatement.

In recent months, CSC suspended a high-ranking company executive after allegations of bribery over illegal contracts surfaced. The company has agreed to conduct an internal investigation on the matter.

In just the past few weeks, CSC has filed a lawsuit against Cognizant Solutions, accusing the company of poaching employees and clients through a former executive who now works for the Teaneck, N.J.-based solution provider.

Outside of the courtroom, CSC has been making headlines for its business decisions. Just two weeks ago, the $12.2 billion solution provider announced it would split into two separate publicly traded companies.

PUBLISHED JUNE 1, 2015