Two former executives at WageWorks, a provider of flexible spending account services, have been charged by the SEC on grounds of carrying out accounting violations.
Joseph Jackson and Colm Callan, ex-CEO and CFO at the group, reportedly made false and misleading statements and omissions that led to an improper recognition of revenue related to a public-sector client contract.
According to the SEC’s order, March 2016 saw a WageWorks client refuse to pay for a set of development and transition work that belonged to the contract.
In turn, Callan directed WageWorks to recognize $3.6m in revenue that had not been received, despite repeated questioning from the firm’s internal accountants and external auditor.
As a result of the SEC’s charge, Jackson has agreed to pay a $75,000 penalty and Callan a $100,000 fine.
Melissa Hodgman, acting director of the division of enforcement at the SEC, said: “Executives should not profit from their or their company’s misconduct.
“Today, the SEC exercised its longstanding authority to hold executives accountable through clawbacks by requiring Jackson and Callan to reimburse WageWorks for compensation they received stemming from their violations.”
WageWorks restated its 2016 FY, Q2, and Q3 financial statements in 2019, reversing the false revenues that had been put in place three years previous.