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The Securities and Exchange Commission has charged media analytics firm Comscore and its onetime CEO with accounting and disclosure fraud.
The government agency on Tuesday said that Comscore and former CEO Serge Matta overstated revenue by around $5 million and made false and misleading statements about its performance metrics. Comscore and Matta have settled the charges with the SEC by agreeing to stop behavior that would lead to further violations and to pay penalties worth $5 million and $700,000, respectively.
Matta will also reimburse Comscore the $2.1 million he made through the sale of the company’s stock or incentive-based compensation. He also will be prohibited from serving as an executive officer or director of a public company for 10 years.
“As the SEC orders find, Comscore and its former CEO manipulated the accounting for non-monetary and other transactions in an effort to chase revenue targets and deceive investors about the performance of Comscore’s business,” said Melissa R. Hodgman, associate director in the SEC’s Enforcement Division. “We will continue to hold issuers and executives accountable for such serious breaches of their fundamental duty to make accurate disclosures to the investing public while giving appropriate credit for a company’s prompt remedial acts and cooperation.”
Comscore, which was founded in the late 1990s and counts WPP as an investor, has been in a period of turmoil, losing money and seeing a revolving door of executives. CEO Bryan Wiener resigned from his post in March after a little more than a year, saying at the time that he had “irreconcilable differences” with the board over the company’s strategy.
Matta was appointed CEO of Comscore in 2014 after 14 year at the company. He held the role for nearly three years before leaving in 2016. Following his departure from Comscore, Matta served as president of location intelligence firm GroundTruth and, in August, became the president and CEO of video analytics company ICX Media.
The SEC’s investigation found that during a two-year period from 2014 to 2016, Comscore at the direction of the Matta agreed to non-monetary transactions with an unnamed counterparty where it exchanges sets of data without receiving cash in return. It then recognized revenue on those transactions at a fair-market value that had been increased to inflate its revenue. Further, the SEC said that Comscore and Matta made false and misleading disclosures about its customer base and flagship product, including that Matta lied to Comscore’s internal accountants and external auditing firm. Through these tactics, per the SEC, Comscore was able to “artificially exceed” its revenue target for seven consecutive quarters and “create the illusion of smooth and steady growth in Comscore’s business.”
“We are pleased to have settled this legacy issue with the SEC,” said Comscore chairman Brent Rosenthal. “In addition to our commitment to compliance and with this matter behind us, the Board and I remain fully focused on the business and are committed to further developing our unique data assets, differentiated data analytics, and strong brand equity.”
Added interim Comscore CEO Dale Fuller: “With this matter now resolved, Comscore remains focused on its next phase of growth in order to drive profits and maximize shareholder value through the continued alignment of strategic priorities and development and delivery of products to drive future profitability.”
Sept. 24, 1:41 p.m. Updated with statements from Comscore’s chairman and interim CEO.
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