The Securities and Exchange Commission (SEC) has charged measurement firm Comscore and its former chief executive officer, Serge Matta, with fraud over a scheme that saw the company overstate its revenue by around $50m and make false claims about key performance metrics.
Both Comscore and Matta have settled with the SEC, “without admitting or denying the orders' findings,” for $5m and $700,000, respectively. Matta has also agreed to reimburse Comscore $2.1m.
The charge stems from a scheme that spanned February 2014 to February 2016. The SEC claims that at the behest of Matta, Comscore “entered into non-monetary transactions for the purpose of improperly increasing its reported revenue.”
The SEC also found that Comscore and Matta made “false and misleading public disclosures” about the company’s flagship product and that Matta lied to Comscore’s internal accountants and external audit firm.
"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 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."
Brent Rosenthal, chairman of the board of Comscore, said the company is pleased to have settled with the SEC.
“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," said Rosenthal.
The SEC claimed the scheme allowed Comscore to artificially exceed its revenue target in seven consecutive quarters and “create the illusion of smooth and steady growth” in its business.
Comscore has not necessarily been a model of smooth growth since the scandal broke. The company is already on its third chief executive since replacing Matta in August 2016. Dale Fuller is currently in the interim role after Bryan Wiener left in April after less than one year as top boss.
Comscore recently laid of 8% of its staff, but claims it will be cashflow positive by the end of the year as it focuses on TV.
"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," said Fuller.
After a three year stop as president of GroundTruth, Matta now leads video analytics startup ICX Media.
The SEC has barred Matta from serving as an officer or director of a public company for 10 years.
Neither Matta nor ICX, through a representative, immediately responded to comment.