SEC Charges U.S. Navy Shipbuilder Austal USA with Accounting Fraud

The Securities and Exchange Commission today announced that Austal USA, LLC, a Mobile, Alabama-based shipbuilder, and its Australia-based parent company, Austal Limited, have agreed to settle the SEC’s charges that the companies conducted a fraudulent revenue recognition scheme. As part of the settlement with the SEC, Austal USA will pay a $24 million civil penalty. According to the SEC’s complaint, from at least January 2013 through July 2016, the Austal companies engaged in a scheme to artificially reduce by tens of millions of dollars 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.