TWO FORMER VICE PRESIDENTS OF ARTHROCARE CORPORATION SETTLE WITH THE SEC

The following is an excerpt from the SEC website:

"On June 27, 2011, the Securities and Exchange Commission filed a settled civil action in United States District Court in Austin, Texas against John Raffle and David Applegate, two former senior vice presidents of ArthroCare Corporation. The Commission alleges that, between 2006 and the first quarter of 2008, Raffle and Applegate caused ArthroCare to improperly record revenue from shipments of spine products to various distributors, even though the distributors often did not need the products or have the ability to pay for them. Most of the improper transactions occurred at or near the end of quarters and were intended to enable ArthroCare to satisfy external revenue and earnings targets. As a result of these transactions, ArthroCare's publicly reported revenue and earnings were materially misstated. The Commission further alleges that Raffle misled ArthroCare's accountants and auditor about aspects of these transactions.
Raffle and Applegate agreed to settle the Commission's charges, without admitting or denying the complaint's allegations. Under the settlement, Raffle consents to a judgment permanently enjoining him from violating Section 17(a) of the Securities Act of 1933 ("Securities Act") and 13(b)(5) of the Securities Exchange Act of 1934 ("Exchange Act") and Rules 13b2-1, and 13b2-2 thereunder, and from aiding and abetting violations of Exchange Act Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The judgment also orders him to pay $1,782,742.43 in disgorgement plus prejudgment interest of $329,230.44, but waives payment of all but $175,000 of this amount, and does not impose a civil penalty, based upon his sworn financial statements.
Applegate has consented to a judgment permanently enjoining him from violating Section 17(a) of the Securities Act and aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder. The judgment orders him to pay $621,754.60 in disgorgement plus prejudgment interest of $106,469.70, but waives payment of all but $55,000 of this amount, and does not impose a civil penalty, based upon his sworn financial statements.
Under the settlement, Raffle and Applegate both will be barred from serving as officers or directors of public companies for five years.
The Commission also settled with Raffle's ex-wife, Kathy Raffle, to recover $200,000 of incentive compensation and profits from sales of ArthroCare stock John Raffle obtained during the course of the earnings management scheme, which Kathy Raffle received in a divorce agreement. The Commission does not allege any wrongdoing by Kathy Raffle.
The proposed judgments are subject to court approval."