Global IT Company Settles SEC Charges for Accounting Violations

A global producer of computer equipment and its former chief financial officer ("CFO") settled SEC charges for improper accounting methods, filing "materially misstated financial statements" and failing to maintain sufficient internal accounting controls.

The SEC alleged that the company's executives, including its former CFO, pressured employees to maximize end-of-quarter revenue through improper accounting methods. Additionally, the SEC found that the company underreported warehousing, shipping and product repair costs, as well as liabilities accrued from the company's cooperative marketing program. As a result, the SEC charged the company with violating Section 17 of the Securities Act ("Fraudulent Interstate Transactions") and Sections 13(a) and (b) ("Periodical and other reports") of the Exchange Act.

To settle the charges, the company agreed to (i) cease and desist from further violations and (ii) pay a $17.5 million penalty. Separately, the company's former CFO agreed to (i) cease and desist from further violations, (ii) disgorge $300,000 and (iii) pay a $50,000 penalty. The company's current CEO also agreed to reimburse the company for $2.1 million in stock profits.