SEC Continues Focus on Internal Fraud Controls

The Securities and Exchange Commission’s (“SEC”) latest investigation into companies that lack adequate internal controls to identify fraud and other illegal activities has resulted in a settlement with a California communications technology company, Polycom, and its former CEO, Andrew Miller.

The SEC has charged that Miller allegedly used $190,000 in corporate funds to pay for personal expenses, including travel, entertainment, clothing and accessories, tickets to sporting events and other goods and services. The SEC said that Miller falsified expense reports to report personal expenses as business expenses. Polycom’s audit committee discovered this activity in 2013, and Miller subsequently resigned his position as CEO.

In addition, the SEC alleges that Polycom failed to disclose Miller’s personal expenses in its annual report, a violation of Section 14(a) of the Securities Exchange Act. The SEC said Polycom also violated Section 13 of the Exchange Act by failing to maintain adequate internal controls. Specifically, the SEC said that Polycom failed to exercise sufficient oversight of its corporate credit cards and travel booking system, allowing Miller to approve his own expenses and use of company credit cards.

The SEC alleges that Miller violated antifraud, periodic reporting, proxy solicitation, books and records and internal controls provisions of the Exchange Act. Miller is also accused of falsely certifying the accuracy of the company’s annual report proxy statements.

Polycom has agreed to pay a $750,000 penalty and to cease and desist from further violations of the Exchange Act. The case against its former CEO Andrew Miller is currently in a California federal court.

The Cogdell Law Firm is a full service criminal litigation and appellate law firm with a focus on federal fraud defense, Medicare fraud defense, bank fraud defense, and white collar criminal defense. We provide client-focused representation at all stages of the process, whether our clients are seeking to avoid charges, have been charged, or are seeking reversal of a conviction on appeal. When results matter most, contact Dan Cogdell at (713) 426-2244 or dan@cogdell-law.com.

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