The SEC charged a Georgia biotech company and three of its former executives with artificially inflating the reported revenue. Pending court approval, the company agreed to pay $1.5 million to settle the charges.
According to the Complaint filed in the U.S. District Court for the Southern District of New York, the executives conducting an accounting fraud scheme between the first quarter of 2013 to the third quarter of 2017. Allegedly, the executives recognized revenue at the time it was shipped to five of its largest distributors. The revenue should not have been recognized at that time, according to the SEC, because the executives and distributors were also engaged in a "secret side arrangement." Additionally, the SEC found that the executives attempted to cover up the misconduct by lying to and withholding information from the company's audit committee, outside auditors, outside counsel and the SEC.
The SEC is seeking, among other things, (i) an injunction, (ii) to permanently bar the executives from being an officer or director of any public company, (iii) to order the defendants to disgorge all illicit gains, (iv) civil money penalties, and (v) for two of the executives to return all bonuses, inventive-based and equity-based compensation.
