Technology Company Settles SEC Charges for Disclosure Violations

A technology company settled SEC charges for misleading investors by failing to disclose the potential impact of various sales practices.

According to the Order, the company used a variety of incentives to accelerate the sales of printing supplies expected to materialize in later quarters in order to increase its quarterly operating profit. In addition, the SEC found that the company's regional managers sold discounted products outside of their designated territories, in violation of company policy and the terms of its distributor agreements. The SEC determined that the company "failed to disclose known trends and uncertainties associated with these sales practices," and made incomplete disclosures about its internal channel inventory, which gave only a partial picture of the company's channel health. As a result of its findings, the SEC determined that the company violated the antifraud, reporting and disclosure provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act, Section 13(a) of the Exchange Act and SEA Rules 13a-1 ("Requirements of Annual Reports"), 13a-13 ("Quarterly Reports on Form 10-Q"), 13a-15 ("Controls and Procedures") and 12b-20 ("Additional Information").

To settle the charges, the company agreed to (i) cease and desist from committing any future violations and (ii) pay a $6 million civil penalty.