Comscore and its former CEO Serge Matta were charged Tuesday by the SEC with engaging in a fraudulent scheme to overstate revenue by approximately $50 million and making false and misleading statements about key performance metrics.
The company settled with the SEC, without admitting guilt nor denying the commission’s findings, for a sum of $5 million and $700,000 in penalties. Matta, in a separate settlement with the SEC, agreed to reimburse Comscore for $2.1 million. Matta resigned from Comscore in 2016. As part of his settlement, he has agreed to not serve as a public company officer or director for a 10-year period.
“We are pleased to have settled this legacy issue with the SEC,” said Brent Rosenthal, Chairman of the Board of Comscore. “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.”
The SEC said it found that from February 2014 through February 2016, Comscore, at the direction of Matta, entered into non-monetary transactions for the purpose of improperly increasing its reported revenue. Through these transactions, Comscore and a counterparty would negotiate and agree to exchange sets of data without any cash consideration.
Comscore then reported revenue on these transactions based on the fair value of the data it delivered, despite no money changing hands.
The SEC also accused Comscore and Matta of making false and misleading public disclosures regarding the company’s customer base and flagship product, and that Matta lied to Comscore’s internal accountants and external audit firm. The SEC says this scheme enabled Comscore to artificially exceed analyst projections and “create the illusion” of smooth and steady growth.
“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.”