- Digital Trends
- Comscore, a major media analytics company, was charged with fraud under former CEO Serge Matta.
- The company’s new leadership paid a $5 million penalty to settle the charges with the Securities and Exchange Commission. They neither confirmed nor denied the accusations.
- Comscore recently turned over a new leaf and made a major reorganization.
- Visit Business Insider’s homepage for more stories.
Comscore, the media measurement and analytics firm that just reorganized after layoffs in an effort to compete with industry leader Nielsen, reached a settlement with the Securities and Exchange Commission after being charged with fraud.
After conducting an investigation into the accounting practices of Comscore under its former CEO, Serge Matta, the SEC alleged that the company and CEO exaggerated company revenue by about $50 million in financial disclosures and misled investors and the public about their performance.
The SEC alleged that between 2014 and 2016 Matta instructed Comscore to enter into non-monetary transactions such as data exchanges in order to increase its reported revenue. The SEC alleged that Comscore was able to exceed revenue targets seven quarters in a row, which created the illusion of growth.
“Comscore recognized revenue on these transactions based on the fair value of the data it delivered, which had been improperly increased in order to inflate revenue,” the SEC said in a statement Tuesday.
Matta also lied to Comscore’s internal accountants and external audit firm, the SEC alleged.
Comscore neither admits nor denies the charges, the media giant said in a statement the same day.
Comscore and Matta settled charges by agreeing to comply with the antifraud provisions of the federal securities laws in the future and paying fines. Comscore agreed to pay $5 million in penalties, while Matta paid $700,000 in addition to $2.1 million reimbursing Comscore for profits from the sale of its stock and other compensation.
Matta is also blocked from serving as an officer or director of a public company for 10 years.
“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,” Melissa Hodgman, associate director of the SEC’s enforcement division, said in a statement.
Comscore said it cooperated with the SEC during the investigation and made significant efforts to address the charges, including replacing Matta as CEO and implementing new internal policies.
All senior managers who were with the company during the time the SEC says they committed fraud no longer work there, Comscore said.
Bryan Wiener, another former CEO, and Sarah Hofstetter, a former president, both resigned in March after less than a year in their roles.
Wiener reportedly parted ways with Comscore becasue of “irreconcilable differences” with the board over the company’s strategy, according to The Hollywood Reporter’s Natalie Jarvey.
Former chief operating officer Kathy Bachmann and former chief product officer Dan Hess soon followed, and the company cut 10% of its workforce in May and another 8% in August.
Variety’s Brian Steinberg reported that both Wiener and Hofstetter were brought in to help keep opperations at Comscore smooth as the accounting situation was investigated and resolved.
The firm told Business Insider it would be cashflow positive by the end of the year.
“We are pleased to have settled this legacy issue with the SEC,” Brent Rosenthal, the chairman of the board at Comscore, said in a statement. “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.”