NEW YORK, Aug. 23 (UPI) -- Two former Kmart Corp. executives are facing federal fraud charges for allegedly misleading investors in the run-up to the U.S. firm's bankruptcy.
The Securities and Exchange Commission Tuesday said Charles Conaway, the retailer's former chief executive, and John McDonald, former chief financial officer, are both responsible for false and misleading disclosure about Kmart's liquidity in the company's financial statement for the third quarter and nine months ended Oct. 31, 2001, MarketWatch reported.
In particular, the SEC said the pair engaged in "reckless and unilateral" overbuying of about $850 million in inventories during the summer of 2001.
Conaway was fired the next year, and McDonald left at the same time.
Along with seeking fines against both former Kmart officers, the SEC will attempt to have both of them banned from serving as officers or directors of public companies.
Kmart emerged from bankruptcy in May 2003 as Kmart Holding Corp., a much smaller retailer. It has since bought retailer Sears Roebuck & Co.
