The U.S. Securities and Exchange Commission is suing two former executives of Logitech International for inflating the company's performance results in 2011 and deceiving investors. The defendants allegedly concealed the poor performance of a TV set-top product.
The SEC filed the complaint in a San Francisco federal court on Monday against Logitech's former chief financial officer, Erik Bardman, and former acting controller, Jennifer Wolf. The two allegedly conspired to fraudulently increase the company's operating income by a $30.7 million overstatement in 2011, misleading an external auditor.
"For Logitech's financial statements, the two executives falsely assumed the company would build all of the components into finished products despite their knowledge of contrary facts and events," the SEC said in the complaint.
Reuters reported the two defendants committed the act after its product Revue, a video streaming device, generated poor sales outcome. Revue's sales were 70% lower than what was projected, so the company reduced the forecast for its operating income.
According to CFO, Logitech has agreed to settle the lawsuit by paying a $7.5 million fine. The company's former controller Michael Doktorczyk and former director of accounting Sherralyn Bolles have agreed to shell out $50,000 and $25,000, respectively, to cover the fines.
Although former CEO Gerald Quindlen was not accused of any offense, he agreed to return $197,487 from incentive-based compensation and stock sale profits for the fiscal year in which the accounting fraud was committed, Market Watch reported.
Furthermore, the lawsuit seeks to compel Bardman and Wolf to pay civil fines and surrender ill-gotten profits and bonuses. They would also be banned from serving as officers or directors in public companies.
Bardman served as Logitech's CFO from October 2009 to April 2013. Revue, which was launched in the third quarter of 2011, only sold around 165,000 units by the end of the fourth quarter. The company projected the sale of 350,000 units.
