The SEC sanctioned India-based Satyam Computer Services Limited for fraudulently overstating revenue, income and cash balances by more than $1 billion over a 5-year period;  the Commission sanctioned the firm's auditors, Indian affiliates of PricewaterhouseCoopers, for its audit failures in this matter.

It's alleged that former senior officials at Satyam – IT services company based in Hyderabad, India – used false invoices and forged bank statements to inflate the company’s cash balances and make it appear far more profitable to investors.  Although Satyam’s shares primarily traded on the Indian markets, its American depository shares trade on the NYSE.

Shortly after the fraud came to light in January 2009, the India government seized control of the company by dissolving Satyam’s board of directors and appointing new government-nominated directors.  Indian authorities also removed former top managers, oversaw a bidding process to select a new controlling shareholder, and filed criminal charges against several former officials.

        Settlement Terms.   In addition to the above actions, Satyam, whose new leadership cooperated with the SEC’s investigation, has agreed to pay a $10 million penalty.  They also are required to conduct specific training of officers and employees concerning securities laws and accounting principles, and improve its internal audit functions.  Satyam will hire an independent consultant to evaluate the internal controls the company is putting in place.

In a related settlement, the SEC sanctioned Satyam’s former independent auditors - Lovelock & Lewes, Price Waterhouse Bangalore, Price Waterhouse & Co. Bangalore, Price Waterhouse Calcutta, and Price Waterhouse & Co. Calcutta – for widespread violations of federal securities laws and improper professional conduct - above and beyond their auditing failures involving Satyam's financial statements from 2005 through January 2009.  The firms will pay a $6 million fine - the  largest ever by a foreign-based accounting firm in an SEC enforcement action ;  the PW India affiliates also will:  (i) refrain from accepting any new U.S.-based clients for a period of 6 months;  (ii) establish training programs for its officers and employees on securities laws and accounting principles;  (iii) institute new pre-opinion review controls;  (iv) revise its audit policies and procedures;  and, (v) appoint an independent monitor to ensure these measures are implemented.

For further details, go to:   [SEC Release 11-81, 4/5/11 - Satyam]   and [SEC Release 11-82, 4/5/11 - PwC]