The SEC has rendered a judgment against Karen Rosenberger, former CFO of New Jersey-based Synchronoss Technologies, for past accounting misconduct which “resulted in the overstatement of revenue” by the company.
Without admitting or denying the various allegations, Rosenberger consented to a final judgment which will include $125,000 in civil monetary penalties, to reimburse the company $430,000 in compensation, and a permanent injunction, barring her from serving as an officer or director, according to the SEC.
Rosenberger was alleged to have “aided and abetted the company’s public filing of materially false financial statements with respect to five transactions.” Synchronoss had to restate past filings and, according to the SEC, engaged in fraud with respect to three of those transactions. Two of these transactions involved one of the company’s largest customers, and the third involved a business acquisition.
Additionally, the SEC alleged Rosenberger covered her tracks by lying to its auditor Ernst & Young, falsifying the books and “failing to implement or maintain, and circumventing” the company’s system of accounting controls. The net result was material misstatements and allowing the company to hit revenue expectations that would not have been met otherwise.
The charges were originally brought in 2022 against the company and seven senior employees, including Rosenberger and former controller Joanna Lanni, for the accounting misconduct that ran from 2013 to 1017.
Former CEO Stephen Waldis was not charged with misconduct, but agreed to reimburse the company for more than $1.3 million in stock sale profits and bonuses, as well as surrendered previously granted company stock. The complaint targeted Rosenberger specifically, and alleged Lanni was involved improper accounting for one transaction.
The misconduct was initially detected in a July 2018 SEC filing, where the company announced a restatement of audited financials for financial data in 2013, 2014, 2015 and 2016, which totaled approximately $190 million in revenues. Synchronoss disclosed it filed with the SEC materially misleading financial statements and had material weaknesses in its internal controls.
In addition to Rosenberger’s civil penalty and litigation against Lanni, five other employees have been penalized. Ronald Prague, the company’s general counsel at the time, paid a civil penalty of $25,000 and was suspended from practicing as an SEC attorney for 18 months.
Former employees Clayton “Charlie” Thomas, Marc Bandini, Daniel Ives, and current employee John Murdock, all previously settled charges from their participation and agreed to pay civil penalties ranging from $15,000 to $90,000.