Three former executives of Endurance International Group Holdings and Constant Contact Inc., acquired by Endurance in 2016, have settled charges with the Securities and Exchange Commission (SEC) for reporting inflated subscription metrics for their web hosting and internet-based marketing products.
More specifically, the SEC found that Constant Contact, Inc. staff were instructed to offer free services to customers intending to cancel their subscriptions. Although those customers were no longer paying for services, Constant Contact kept them listed as active subscribers, concealing the company's slow customer growth pattern.
Endurance also failed to inform investors in a timely manner about an error which resulted in the company overstating its own subscriber count. Inaccurate metrics were then reported to potential investors.
Endurance has agreed to $8 million in penalties. The executives have settled the charges by agreeing to pay $1.38 million and $34,000 respectively in disgorgement, interest, and associated penalties, while not admitting or denying wrongdoing.
In addition, they also agreed to cease-and-desist order from further violations of various anti-fraud, reporting, books and records, and internal controls violations.
Click to read the full SEC Press Release.
The Investment Advisers Act of 1940 ("Advisers Act") requires firms to present accurate information in all sales and marketing activities. Business operating metrics, such as subscriber base figures, are critical in evaluating customer growth patterns and overall profitability for subscription-based businesses - key information allowing potential investors to make informed and fair decisions.
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Dharmi is an excellent securities lawyer who understands the law as it pertains to these cases. She is extremely proactive and represents her clients well. I highly recommend Jacko and Dharmi.Posted on Google
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everistus etafoIt is my great Privilege to share my Review of what Atty Dharmi Mehta of Jacko Law Group did for me and by extension for my family. From the first time complimentary conversation we had having spoken to several other Lawyers ,l knew she was the right person for the Job .Because of her background as a former RR ,she was professional,kind, Empathetic,listened and was focused on fighting for me. From a potential of been terminated with cause ,l was able to walk away with a clean U5 with a validation that l did nothing wrong except what was in the best Interest of my clients. I hope nobody ever has to go through what l have Experienced, but if you do ,you want Dharmi Mehta beside you .Rest assured your service Deserve 10 stars but this forum only allows 5. Me and my family are forever grateful and will make sure that any RR who needs an advocate will know about you . Everistus EtafoPosted on Google
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