SEC brings enforcement action for violation of "equal or greater prominence" requirement in presentation of non-GAAP financial measures

The SEC’s Division of Enforcement recently instituted cease-and-desist proceedings against a company for violating Section 13(a) of the Exchange Act and Rule 13a-11 by including non-GAAP financial measures in two of its earnings releases without presenting the most directly comparable GAAP financial measures "with equal or greater prominence." The non- GAAP financial measures, which included adjusted EBITDA and adjusted net income, appeared in the headlines and a highlights section of the earnings releases. The company agreed to pay a US$100,000 civil money penalty in settlement of the enforcement action.

The SEC’s order in this action is available here.  

To learn more about this enforcement action and what to consider now, click here.


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