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The U.S. Securities and Exchange Commission has sent notices of possible civil action to some of Diebold Inc.'s current and former employees, prompting one of the recipients, Chief Financial Officer Kevin Krakora, to step down, the ATM maker announced today. The SEC sent the notification, known as Wells notices, to employees who handled Diebold's finances during a period of several years for which the North Canton, Ohio-based company already has restated its earnings. The agency sends Wells notices after an investigation but before it takes an action against an individual or company, giving recipients a chance to respond. In 2007, Diebold said it would change the way it recognizes revenue in response to an SEC investigation into Diebold's use of the "bill and hold" accounting practice. Under bill-and-hold, a company recognizes revenue before shipping its products to customers. Krakora, who remains with Diebold in a nonfinancial reporting role, took over as chief financial officer in August 2005 following the resignation of his predecessor, Gregory T. Geswein, who left the company to take on a similar role with The Reynolds and Reynolds Co., which provides technology to automotive dealerships. Geswein also received a Wells notice. Diebold itself had not received a Wells notice, but spokesperson Michael Jacobsen says the company has approached the SEC to discuss its options in case it does. "We're continuing to cooperate with the SEC in connection with the previously disclosed investigation," Jacobsen says. "As part of the process, we've had preliminary discussions with the SEC concerning resolution of the matter, including possibly entering into a settlement agreement. But it's still possible that the SEC will issue a Wells notice to the company." Diebold named Leslie A. Pierce, a vice president and corporate controller at the company, as interim CFO. Pierce previously was the company's vice president of accounting, compliance and external reporting.
