SEC v. Austal Limited and Austal USA, LLC

Austal USA, LLC and Austal Limited allegedly conducted a fraudulent revenue recognition scheme. According to the SEC’s complaint, from at least January 2013 through July 2016, the Austal companies engaged in a scheme to artificially reduce the estimated cost to complete certain shipbuilding projects for the U.S. Navy. The complaint alleges that Austal USA knew that its shipbuilding costs were rising and higher than planned, but arbitrarily lowered the cost estimates to meet Austal USA’s revenue budget and projections. The complaint further alleges that based on this fraudulent manipulation of the cost estimates, Austal Limited prematurely recognized revenue and, as a result, met or exceeded analyst consensus estimates for earnings before interest and tax.

Summary generated from official Securities and Exchange Commission press release