Former Kmart chief agrees to settle charges
HOFFMAN ESTATES, Ill. — Former Kmart CEO Charles Conaway has agreed to drop his appeal of a $10 million fine levied last year by the Securities and Exchange Commission for his role in misleading investors. Conaway, who ran Kmart a decade ago after serving as president of CVS, will pay $5.5 million to settle the charges, according to reports from the Associated Press and other news sources.
The case stemmed from SEC charges dating back to November 2001, after Conaway hosted a conference call with Wall Street analysts as Kmart was beset by escalating problems with its business, a mounting cash crunch as its suppliers demanded payment for goods already shipped to the stores and a growing fiscal crisis. Conaway, the SEC charged, failed to warn analysts and investors of the company’s deteriorating condition, which culminated with Kmart’s bankruptcy filing in 2002 and its eventual reorganization and purchase by Sears Holdings.
In his defense, Conaway told the court he never intentionally misled investors about the company’s fiscal health.