Business Standard

Monday, December 23, 2024 | 03:46 PM ISTEN Hindi

Notification Icon
userprofile IconSearch

SEC charges software co for manipulation related to India work

Image

Press Trust of India Washington
US market watchdog SEC has charged a software company and its two former executives, including an India-origin individual, for manipulation related to time sheets of consultants in India.

Saba Software and former executives -- Patrick Farrell and Sajeev Menon -- have been charged for an accounting fraud in which time sheets were falsified to hit quarterly financial targets.

According to the Securities and Exchange Commission (SEC), Saba Software has agreed to pay USD 1.75 million to settle the charges. Farrell and Menon too have consented to settle the case.

The SEC probe found that vice presidents Farrell and Menon were atop a scheme at the company in which "managers based in the US directed consultants in India to either falsely record time that they had not yet worked, or purposely fail to record hours worked during certain pay periods to conceal budget overruns from management and finance divisions".
 

Such improper time-reporting practices enabled the company to achieve its quarterly revenue and margin targets by improperly accelerating and mis-stating virtually all of its professional services revenue during a four-year period, the regulator said in a statement on Wednesday.

Apart from the USD 1.75 million fine, Saba Software has agreed to pay further penalties if it has not filed restatements of its earnings during those periods by later this year, among others.

"Farrell agreed to pay disgorgement and prejudgement interest of USD 35,017 and a penalty of USD 50,000, and Menon agreed to pay disgorgement and prejudgement interest of USD 19,621 and a penalty of USD 50,000," SEC said.

Without admitting or denying the findings, the company and the two individuals have agreed to cease and desist from committing or causing future violations of these provisions the securities laws.

Under the 'claw back' provision of the Sarbanes-Oxley Act, executives can be compelled to return certain money they earned while their company was misleading investors.

In a separate order, SEC has asked Saba Software's CEO Babak Bobby Yazdani to reimburse the company USD 2.5 million in bonuses and stock profits that he received while the accounting fraud was occurring. However, he was not charged with misconduct.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Sep 25 2014 | 5:31 PM IST

Explore News