WASHINGTON — The Securities and Exchange Commission on March 4 announced it had approved settlement agreements with Krispy Kreme Doughnuts Inc. and former executives with the company. Both settlements were in connection with company actions between February 2003 and May 2004 in which Krispy Kreme allegedly inflated quarterly and annual earnings. In its settlement, the company consented to a cease and desist order, committing to filing accurate financials with the S.E.C. and maintaining adequate internal financial controls. In reaching the settlement, the company did not admit to wrongdoing.

"We are pleased that the S.E.C. investigation has concluded on satisfactory terms, with no monetary penalty against the company," said Darryl R. Marsch, senior vice-president and general counsel for Krispy Kreme. "Today, we can finally close the book on this investigation into the events that occurred under former Krispy Kreme management."

On the same day, the S.E.C. filed a complaint in the U.S. District Court for the Middle District of North Carolina, alleging wrongdoing against the former executives — Scott A. Livengood, former chairman, president and chief executive officer; John W. Tate, former chief operating officer and Randy S. Casstevens, former chief financial officer.

Elaborating on the charges, the S.E.C. said the executives knowingly under accrued or reversed previously accrued incentive compensation expense and that Mr. Tate helped the company "engage in a bogus round trip transaction."

Under such arrangements, Krispy Kreme paid money to a franchise with the understanding that the franchise would repay the money in a pre-arranged manner allowing the company to record additional pre-tax net income. The complaint also alleges the executives sold stock after an earnings announcement for the second quarter of fiscal 2004. Among provisions of a proposed consent order, the former executives agreed to cease and desist from further violations, disgorgement of "ill-gotten gains with prejudgment interest" and the payment of civil penalties. The three consented to the agreement without admitting to the allegations.