Just when it seemed Comscore shares were in recovery mode, the audience measurement company’s stock once again moved in the opposite direction, falling below $2 a share on Thursday and to $1.8650 in midday trading on Friday.
The latest problem for Comscore: A $5 million penalty for fraudulently inflating its revenue by $50 million between February 2014 and February 2016.
Comscore on Tuesday released a statement confirming that it had finalized a settlement with the U.S. Securities and Exchange Commission resolving “a previously disclosed” investigation into financial accounting and disclosure practices during that two-year period.
The conduct occurred under prior management, and doesn’t involve former CEO Bryan Wiener.
Rather, the CEO at the time was Serge Matta.
He took over as Chief Executive in February 2014, as Dr. Magid Abraham, Comscore’s co-founder and then-CEO, became Executive Chairman of the Board of Directors.
Matta had been with Comscore since shortly after its inception in 1999. From June 2013, he had served as President of Comscore.
Under Matta, Comscore inflated its revenue by $50 million, starting at the time of his appointment and for the following 8 quarters.
This helped Comscore surpass Wall Street analyst sales estimates for seven quarters.
With Matta misleading Comscore accountants, he signed off on overvalued deals where it provided data sets to other companies, MarketWatch reports.
Another problem: Comscore’s customer rolls were declining, but to avoid sharing this the company, admittedly, changed its definition of what a customer was without telling its investors.
Furthermore, the SEC said Comscore misled investors on the sales of one of its core products, one that measures ad campaigns. It said sales increased; they decreased.
Terms of the settlement include payment by Comscore of the $5 million civil monetary penalty, with Comscore neither admitting nor denying the SEC’s allegations.
A separate SEC proceeding against Matta saw his own settlement with the SEC, in which he has agreed to pay a clawback to Comscore of $2.1 million.
