The Securities and Exchange Commission brought an enforcement action against three former executives of a major media company, alleging that the executives improperly reported $1 billion in online advertising revenue. The SEC alleges that, in 10 separate transactions, the media company declined discounts or lower prices for goods, services, or the settlement of disputes, and instead paid inflated prices that were offset, dollar for dollar, by sums ostensibly paid for online advertising (collectively referred to as the “„round trip? transactions”). This advertising “revenue” artificially inflated the media company?s revenues for the years 2000 through 2003.
The SEC asserted claims for securities fraud, aiding and abetting liability, record keeping violations, and misrepresentations to auditors, and each of the three executives moved for summary judgment. The court denied the motions filed by Mark Wovsaniker, head of Accounting Policy, and Steven Rindner, Senior Vice President of Business Affairs, in their entirety. The motion filed by John Michael Kelly, who held positions as CFO, COO and CEO during the relevant time period, was denied as to the securities fraud and aiding and abetting claims, but granted as to the remaining counts.
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