Three years after accounting issues were found in its books, the Securities & Exchange Commission charged Comscore with fraud and Comscore settled the charges.
The SEC said that from 2014 to 2016, Comscore overstated its revenues by about $50 million.
According to the agency, former CEO Serge Matta “entered into non-monetary transactions for the purpose of improperly increasing its reported revenue." Comscore and Matta also made “false and misleading” public disclosures regarding the company’s customer base and flagship product.”
Related: Reorganization to Cost Comscore $1.5M to $2.5M
The scheme enabled Comscore to “artificially exceed its analyst’s consensus revenue target in seven consecutive quarters to create the illusion of smooth and steady growth in Comscore’s business,” the SEC said.
To settle the charges, Comscore agreed -- to pay a penalty of $5 million and Matta agreed to pay $700,000. Matta also agreed to pay back to Comscore $2.1 million represented profits from the sale of Comscore stock and incentive-based compensation. Matta is barred from serving as an 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 did not to admit or deny the agency's finding
After the accounting issues were disclosed, Comscore had to begin a time-consuming re-audit of its books, which cost the company millions of dollars. Over the next three years, the company lost a series of senior executives, saw its stock de-listed, was unable to make regular financial reports and plans for new media measurement products were disrupted or dropped.
Related: New CEO, President Leave Comscore as Revenue Falls
In the second quarter, Comscore reported that its net less grew to $279 million from $56 million in the second quarter of 2018. Revenue was down 4.4% to $96.9 million.
Comscore stock plunged from a high of $20 a share in May to less than $2 in August. The company’s shares closed at $2.24, down nearly 5% on Tuesday.
In August, Comscore launched a strategic review.
Later In August, Comscore said that its latest plan to reorganize its technology, product and sales organization would cost the company $1.5 million to $2.5 million and that 8% of its workforce would be terminated.
"With this matter now resolved, 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," said Dale Fuller, interim CEO of Comscore.
