SEC sues former Nicor executives

Former Nicor Chief Executive Officer Thomas Fisher of Aurora and two ex-executives were sued Thursday by the U.S. Securities and Exchange Commission for allegedly manipulating gas inventories to meet earnings targets.

Between 1999 and 2002, Fisher, former Finance Chief Kathleen Halloran of St. Charles and former Treasurer George Behrens of Aurora approved improper transactions and misrepresented the Illinois utility's gas in storage, the SEC said in a lawsuit filed at U.S. District Court in Chicago.

Their efforts boosted revenue from a program designed to cut customers' costs, the SEC said.

"The commission will not tolerate accounting ploys and misleading disclosures by senior officers who are intent on making their numbers," Merri Jo Gillette, head of the agency's Chicago office, said in a statement.

The case stems from a program under which Nicor, owner of Illinois' biggest natural-gas utility, was allowed to keep half of any savings from fuel purchased below a benchmark price set by the state. The plan was supposed to lower customers' costs. Instead, the Naperville-based company exploited the formula by hiding its use of cheaper gas acquired before the plan took effect, according to the SEC.

The three executives approved the plan even though they knew it would be abused and later let the company make sham transactions to carry it out, the Washington-based SEC said. They also failed to tell investors about the scheme's unsustainable benefit to earnings in 2000 and 2001, the agency said.

The regulator wants a court to impose fines, confiscate gains and ban the three from serving as officers or directors. All three defendants contest the accusations.

"The allegations in the SEC's complaint are just that, allegations," Fisher said in a statement e-mailed by his lawyer's office. "I look forward to demonstrating that I did not violate the securities laws in any way whatsoever."

Halloran always acted properly and in good faith, her attorney, Ann Tighe of Cotsirilos, Tighe & Streicker in Chicago, said in a statement. "We are confident that Ms. Halloran will be exonerated by the facts," she added.

Behren's attorney, David Stetler of Stetler & Duffy Ltd. in Chicago, called the SEC's claims "seriously flawed," and pledged to "vigorously contest them" in court.

Nicor agreed in March to pay $10 million to settle related SEC accusations. It didn't admit or deny wrongdoing under the accord.