Action against Respondent, founder and CEO of a cloud-based platform solutions company, for alleged misrepresentations to investors. The SEC alleges that Respondent’s company represented that it used subscriber count and average revenue per subscriber to evaluate its operating and financial performance, and Respondent failed to correct material misrepresentations and omissions about those figures made to investors. Respondent has agreed to pay disgorgement of $953,005.65, prejudgment interest of $114,620.02, and a civil penalty of $320,000.
Blog Posts Tagged With Corporate and Other Issues
Subscribe to Corporate and Other Issues RSS FeedIn re Waruna Tivanka Ellawala (A.P. Aug. 21, 2018, Settled)
Action against Respondent, CFO of a cloud-based platform solutions company, for alleged misrepresentations to investors. The SEC alleges that Respondent’s employer represented that it used subscriber count and average revenue per subscriber to evaluate its operating and financial performance, and Respondent failed to correct material misrepresentations and omissions about those figures that were made to investors despite having learned contradictory information. Respondent has agreed to pay disgorgement of $15,566.77, prejudgment interest of $1,785.45, and a
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SEC v. Harpreet Grewal (D. Mass. Aug. 21, 2018, Contested)
Action against Defendant, the former CFO of a marketing solutions subscription company, for allegedly hiding slowing customer growth from investors and inflating publicly reported subscriber numbers. According to the SEC, Defendant designed a program to provide free service to cancelling customers in order to postpone their cancellations from the end of one fiscal quarter into the beginning of the next, and included these customers in paying customer counts reported to investors.
In re Ribbon Communications, Inc., et al. (A.P. Aug. 7, 2018, Settled)
Action against Respondents, a cloud communications company, its former CFO, and its former SVP of sales, for alleged material misstatements to investors regarding projected revenue. According to the SEC, Respondent CFO stated that he was comfortable that estimated revenue would be approximately $74 million in the next quarter despite red flags indicating that the estimate was incorrect. Respondent Company later announced that it was revising its revenue guidance from $74 million to $47-$50 million. Respondent
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SEC v. Roger Duffield and Plandai Biotechnology, Inc. (S.D.N.Y. Aug. 2, 2018, Contested)
Action against Defendants, a biotechnology company and its CEO, for alleged unregistered sales of stock to investors and failure to disclose that proceeds from these sales were transferred to a private company owned by Defendant CEO. The SEC further alleges that these payments were not recorded in the corporate Defendant’s books and records.
SEC v. Axesstel, Inc., et al. (S.D. Cal. June 28, 2018, Settled)
Action against Defendants, a telecommunications equipment company, its CEO, its CFO, and its director of sales, for allegedly misstating revenue in the Company’s financials. The SEC alleges that Defendants recognized revenue on non-existent purchases and purchases that were not finalized, and also inflated the unit prices associated with sales. The SEC further alleges that Defendant executives made material misrepresentations to the company’s auditors. Defendant CFO has agreed to pay a penalty of $40,000 and to
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SEC v. Bhushan Dandawate (N.D. Ill. July 19, 2018, Settled)
Action against Defendant, owner of two consulting and IT solutions companies utilized by Quadrant 4 System Corporation (“QFOR”), in connection with an alleged scheme to aid two QFOR executives’ material misrepresentations regarding the company’s performance and to conceal misappropriation of company funds. The SEC alleges the Defendant used bank accounts and business enterprises under his control to obscure the executives’ misappropriation of funds and to create the appearance of an increase of the company’s business.
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SEC v. Steven J. Barber and Larry Lee Arrowood (M.D. Fla. July 18, 2018, Settled in part and Contested in part)
Action against Defendants, president and CEO of a battery manufacturer, in connection with alleged misrepresentations regarding the company’s performance. The SEC alleges that Defendants distributed misleading press releases regarding the amount of customer orders received by the company and its production capabilities. Defendant Arrowood has agreed to pay a civil penalty of $50,000 and to an officer and director bar, while the SEC’s litigation continues against Barber.
SEC v. Centor Energy Inc., and Frederick DaSilva (S.D.N.Y. July 17, 2018, Settled)
Action against Defendants, an oil exploration company and its CEO, in connection with alleged misrepresentations regarding the company’s business position. The SEC alleges that Defendants made misrepresentations regarding oil reserves on company-leased land, its ability to acquire additional land, and the affiliation of geologists who produced oil reserve projections in press releases, company literature, and SEC filings. The SEC further alleges that Defendant CEO materially misstated stock-purchase options he held. Defendant CEO has agreed to
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SEC v. John D. Schiller, Jr. (S.D. Tex. July 16, 2018, Settled)
Action against Defendant, the CEO of an oil and gas company, in connection with failure to disclose personal loans that were secured in exchange for business contracts and other rewards stemming from Defendant’s corporate position. The SEC alleges that Defendant failed to disclose that he had secured personal loans from a vendor in exchange for business and from an individual investment advisor in exchange for his seat on the board of directors. Defendant has agreed
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In re Genesis Associates Limited Partnership (A.P. July 13, 2018, Settled)
Action against Respondent, a limited partnership, in connection with alleged failure to file Schedule 14D-9 in connection with three tender offers for an investment fund that it managed. Respondent has agreed to pay a $50,000 civil penalty.
In re Advanced Drainage Systems, Inc. and Mark B. Sturgeon (A.P. July 10, 2018, Settled)
Action against Respondents, a drainage pipe manufacturer and its former CFO, in connection with alleged misleading financial statements made in connection with Respondent Company’s IPO and subsequent periodic reports. The SEC alleges that Respondent CFO improperly categorized certain expenses and cost, which led to overstatement of earnings. The SEC further alleges that Respondent Company failed to implement proper internal accounting controls and procedures. Respondent CFO has agreed to reimburse the Respondent Company $173,970 and pay
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In re KBR, Inc. (A.P. July 2, 2018, Settled)
Action against Respondent, an engineering and construction company, in connection with alleged improper revenue recognition and reporting and insufficient internal accounting controls. The SEC alleges that, because of its failure to properly estimate the cost and timeline of certain projects, Respondent improperly overstated revenue in its filing. Respondent, who restated its financials, has agreed to pay a $2,500,000 civil penalty.
In re Beam Suntory, Inc. (A.P. July 2, 2018, Settled)
Action against Respondent, an alcoholic beverage company, in connection with alleged Foreign Corrupt Practices Act violations in India. The SEC alleges that the Defendant’s subsidiaries and business affiliates made improper payments to Indian government regulators and procurement officials. Respondent has agreed to pay $5,264,340 in disgorgement, $917,498 in prejudgment interest, and a $2 million civil penalty.
In re Dow Chemical Company (A.P. July 2, 2018, Settled)
Action against Respondent, a chemical products company, in connection with alleged failure to disclose in its annual proxy statements about $3 million worth of perquisites, including the use of the company aircraft and other expenses, which should have been disclosed as “other compensation” to its named executive officers. Respondent has agreed to pay a civil penalty in the amount of $1,750,000 and to retain an independent consultant for a period of one year to review
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In re Constant Contact, Inc. et al. (A.P. June 5, 2018, Settled)
Action against Respondents, a web hosting and online and email marketing company and its subsidiary, for allegedly making material misrepresentations regarding their subscriber or customer metrics and the growth of those metrics. Respondents have agreed to pay a civil penalty of $8,000,000.
In re Panasonic Corporation (A.P. Apr. 30, 2018, Settled)
Action against Respondent, a global electronics company, for alleged anti-bribery, anti-fraud, books and records, and internal accounting controls violations. According to the SEC, Respondent was involved in a bribery scheme whereby it provided a consulting position to a government official to induce him to assist Respondent in obtaining and retaining business from a state-owned airline. The SEC further alleges that Respondent materially overstated its pre-tax income and net income by backdating an agreement with the
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SEC v. PixarBio Corp. et al. (D. Mass. Apr. 24, 2018, Contested)
Action against Defendants, a biotech startup, its founder and CEO, its employee, and Defendant founder’s friend. According to the SEC, Defendants company, founder, and employee made false statements to investors about their progress in seeking FDA approval for a treatment, the amount of money Defendant company had raised, and a takeover bid of a company that Defendant founder had previously led. In addition, the SEC alleges that Defendants founder, friend, and employee engaged in a
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In re Altaba Inc., f/d/b/a Yahoo! Inc. (A.P. Apr. 24, 2018, Settled)
Action against Respondent technology company in connection with material misstatements and omissions related to a cyber-breach affecting numerous user accounts. According to the SEC, Defendant learned of the breach, which resulted in unauthorized access to users’ personal information, but failed to disclose it in its public filing for approximately two years and failed to disclose business risks related to the breach, such as potential future litigation. In addition, the SEC alleges that Defendant affirmatively denied
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In re The Dun & Bradstreet Corporation (A.P. Apr. 23, 2018, Settled)
Action against Respondent business information company in connection with alleged FCPA violations arising out of conduct of Respondents foreign subsidiaries. According to the SEC, Respondent’s subsidiaries made unlawful payments to obtain or retain business, and these payments were not accurately reflected in the subsidiaries’ books and records. The SEC further alleges that Respondent failed to devise and maintain sufficient internal accounting controls to detect or prevent the improper payments. Respondent has agreed to pay disgorgement
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In re Medifirst Solutions, Inc. & Bruce J. Schoengood (A.P. Apr. 19, 2018, Settled)
Action against Respondents, a medical device company specializing in mobile handheld green and infrared laser devices used for anti-aging and skin care and its principal, for allegedly retaining a sanctioned accountant with knowledge that he was prohibited from acting in a financial management capacity. Respondent has agreed to pay a civil penalty of $22,500.
In re Philip John James & Kevin Silverwood (A.P. Apr. 9, 2018, Settled)
Action against Respondents, two former employees of the U.K. subsidiary of a Florida-based wholesaler of technology products, for allegedly overstating their employer’s income by concealing uncollectible receivables that should have been written off, reversing previously recorded expenses and foreign exchange losses, and prematurely recognizing a vendor rebate. Respondents previously entered into a settlement with U.K. regulatory authorities, paying fines of £35,625 (approximately $46,300).and £11,250 (approximately $14,850), respectively. In light of these payments, the SEC deemed
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In re Maxwell Technologies, Inc., et al. (A.P. Mar. 27, 2018, Settled)
Action against Respondents, an energy storage and power delivery products company, its former Senior Vice President of Sales & Marketing, its former CEO, and its former Corporate Controller, in connection with an alleged accounting fraud scheme that improperly recognized revenue from future quarters in violation of GAAP. According to the SEC, Respondent company issued false and misleading statements regarding its revenue, growth, and gross margins, and inflated its reported financial results. The SEC further alleges
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In re Kinross Gold Corporation (A.P. Mar. 26, 2018, Settled)
Action against Respondent, a gold mining company, for alleged violations of the books and records and internal controls provisions of the FCPA. According to the SEC, Respondent paid vendors and consultants without reasonable assurance that the transactions were consistent with their stated purpose and were not improper payments to government officials. In addition, Respondent allegedly used petty cash to make certain of these payments, which it failed to accurately describe in its books and records.
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