About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline

5 Issue 4 Int'l J.L. Mgmt. & Human. 1 (2022)

handle is hein.journals/ijlmhs18 and id is 1 raw text is: International Journal of Law Management & Humanities

An SEC Case Study of Manitex
International, Inc. Securities Fraud Using
Bill and Hold Sales to a Related Party to
Overstate Revenue
This is a case study of In the Matter of Manitex International, Inc., an administrative cease-
and-desist proceeding conducted by the U.S. Securities and Exchange Commission (SEC)
on September 29, 2020. The specific issues covered in this case include (a) the elements of
several types of securities fraud according to U.S. federal law; (b) how corporate officers
of Manitex carried out two fraud schemes over several years resulting in the pilferage of
inventory and the use of bill and hold(b&h) sales to overstate revenue; (c) what is meant
by a b&h sale; (d) the legal requirements which would justify the inclusion of b&h sales in
the revenue of a company; (e) why a b&h sale to a related party deserves special scrutiny;
(f) the legal duty of corporate officers of an issuer to maintain a system of effective financial
reporting and internal accounting controls; (f) whether corporate officer defendants are
required to have accounting expertise to be held liable for securities fraud; (g) whether a
restatement of financial statements is ample justification for disgorgement of a corporate
officer's bonus; and (h) implications for auditors emanating from this case.
Keywords: securities fraud, inventory theft, bill and hold sale, overstated revenue,
related party
The problem in this article is to study the SEC cease-and-desist proceeding titled In the Matter
of Manitex International, Inc. and to focus on: factors indicative of overvaluation of a firm's
revenue due to recognition of b&h sales, how a business firm's internal controls (or lack
thereof) impact a securities fraud case, the legal elements required to prove several types of
securities fraud, whether it is essential for a defendant in a corporate securities fraud case to
have accounting expertise in order to show actual knowledge of an accounting violation, and
implications for auditors emanating from this case.
1 Author is a Professor of Accounting and Business Law at the College of Business, Tarleton State University,
Fort Worth, Texas, USA.
© 2022. International Journal of Law Management & Humanities         [ISSN 2581-5369]


[Vol. 5 Iss 4; 01]

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.

Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Contact us for annual subscription options:

Already a HeinOnline Subscriber?

profiles profiles most