AP: Allen Failed to Report Stock Options

Sen. George Allen, R-Va., speaks at the 2006 "Values Voter Summit" in Washington in this Sept. 22, 2006, file photo. (AP Photo/Kevin Wolf) (Kevin Wolf - AP)

Xybernaut declined comment.

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ALLEN ASSISTED COMPANIES AS GOVERNOR

As Virginia's governor, Allen took representatives of Xybernaut and Ericsson on trade missions. He helped steer $4 million in tax-exempt bonds to Commonwealth for new headquarters and announced an $800,000 state grant to help Lynchburg, Va., prepare a site for an Ericsson expansion.

Then he went to work for those companies.

Allen joined Commonwealth's board of directors about two months after leaving the governor's office in January 1998. Xybernaut named him a director that August, and he became a Com-Net Ericsson adviser in February 2000.

"He was an ex-governor and pre-senator," Commonwealth's Harris said. "He represented a skill set that was of value to the company in terms of his corporate legal experience and he was, and is, a high-profile person prominent in Virginia and elsewhere."

The three companies have had starkly different fates in recent years.

Com-Net Ericsson became part of Tyco after Allen left the board, and got a new management team.

Commonwealth reported its first full year of profitability in 2005.

Xybernaut, which makes a computer people can wear on their heads, sought bankruptcy protection last year and is being sued by shareholders. The SEC also is investigating the company.

Allen's office said he had no knowledge of any wrongdoing at Xybernaut. The senator sold his Xybernaut stock at a modest loss in 2005.

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BELATED FILINGS TO REGULATORS

At least twice during his corporate service, companies told the SEC that Allen had failed to promptly file required reports on insider stock transactions.

In March 1999, Commonwealth reported to the SEC that Allen failed to "timely file" a report showing an initial statement of beneficial ownership in the company and a single acquisition of stock. The transactions were subsequently reported, it said.

In April 2000, Xybernaut told the SEC that Allen and all but one of his fellow directors failed to file statements of beneficial ownership in a timely way.

The SEC makes it the responsibility of directors, not their companies, to file insider stock notifications. Those who file them late can face civil penalties.

Allen's office said he considered it the companies' responsibility to file the reports and the SEC never contacted him or took action against him.