United Rentals Case 8/17/2004

To have your information reviewed for options and to recieve notifications about this case, please use this form. You may also send an email to mail@shareholdersfoundation.com, or call us at (858) 779-1554.
Company Name(s): 
United Rentals
Case Name: 
United Rentals Case 8/17/2004
Case Status: 
Lawsuit Filed
Case Status: 
Judgment Issued
Case Status: 
Settlement Proposed
Case Status: 
Settlement Approved
Affected Securities
NYSE: URI
Lawsuit Overview
Type of Lawsuit: 
SEC Action
Date Filed: 
08/17/2004
Class Period Begin: 
02/28/2001
Class Period End: 
08/30/2004
Settlement Amount: 
$27,500,000
Deadline to Participate in Settlement: 
05/18/2009
Summary: 

According to the U.S. Securities and Exchange Commission (“SEC”), the SEC filed charges against United Rentals, Inc. (URI) alleging that URI engaged in financial fraud and in a broad range of other improper accounting practices. URI is one of the largest equipment rental companies in the world with a network of rental locations in the Unites States, Canada and Mexico.The SEC’s complaint, filed in the United States District Court for the District of Connecticut, alleges that, from late 2000 through 2002, URI engaged in a series of fraudulent transactions undertaken in order to meet URI’s earnings forecasts and analyst expectations. The fraud was accomplished primarily through a series of interlocking three-party sale-leaseback transactions orchestrated by URI’s then- Chief Financial Officer, Michael Nolan, and its then- Chief Acquisitions Officer, John Milne. Nolan and Milne were previously charged by the SEC for individual wrongdoing.The complaint alleges that in these transactions URI sold used equipment to a financing company and leased it back for a short period, and then arranged for a third party equipment manufacturer to agree to sell the equipment at the end of the lease period and guarantee the financing company against any losses incurred in the resale of the equipment. URI separately guaranteed the equipment manufacturer against any losses it might incur under the guarantee it had extended to the financing company.The SEC’s complaint also alleges that in another effort to improve its earnings, URI engaged in a series of fraudulent “trade packages” with suppliers. The company sold blocks of used equipment for amounts in excess of fair value, in exchange for certain undisclosed financial inducements offered to those suppliers.In addition, the SEC alleges that from 1997 to 2000, during a period of enormous growth through acquisitions, URI engaged in other improper accounting practices involving its valuations of acquired assets, use of acquisition reserves, and accounting for customer relationships as well as improperly accounting for other items that overstated net income, including its estimation and recording of self-insurance reserves, its recognition of equipment rental revenues, and its income tax accounting.Without admitting or denying the charges, URI has agreed to settle the SEC’s enforcement action and pay $14 million penalty, which the SEC intends to place in a Fair Fund for distribution to affected investors.In addition to the financial penalty, URI consented to be permanently enjoined from violating Section 17(a) of the Securities Act of 1933, Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13, thereunder. The settlement is subject to court approval.In determining to accept URI’s settlement offer, the SEC considered URI’s cooperation with the SEC and its staff in the investigation leading to this action, and the remedial actions it has taken.