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Securities Regulation, Keyed to Choi
United States v. Armbruster
Citation:
48 F.4th 527 (2022)Facts
Peter Armbruster served as Chief Financial Officer of Roadrunner Transportation Systems, a publicly traded company, with responsibility for preparing and certifying consolidated financial statements filed with the SEC. Between 2014 and 2016, multiple Roadrunner employees, including controllers Stephen Voorhees and Christopher Lacey, and vice president Heather Hipke, repeatedly informed Armbruster that Morgan Southern, a subsidiary, had materially overstated two balance sheet items: an IKEA Maersk receivable and a prepaid taxes account, with overstatements totaling at least $2-4 million. Despite this knowledge, conveyed through meetings, emails, and a November 2016 “whiteboard meeting” where accounting problems were explicitly listed, Armbruster continued to allow these overstatements to remain in Roadrunner’s consolidated financial statements. In November 2016, Armbruster signed a management representation letter to Deloitte & Touche stating he had provided accurate information, and Roadrunner filed its third quarter 2016 Form 10-Q containing the misstatements. When the problems were later discovered, Roadrunner was forced to restate financials showing a $66.5 million decrease in net income, causing significant stock price drops.
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