SEC Charges Hertz's Former Controller for Role in Company's Accounting Misstatements
Dec. 5, 2019
File No. 3-19613
December 5, 2019 - The Securities and Exchange Commission today announced fraud and other charges against Jatindar Kapur, CPA, the former Senior Vice President of Finance and Corporate Controller at Hertz Global Holdings Inc., for his involvement in an accounting fraud.
According to the SEC's order, from at least February 2012 through March 2014, Hertz Global made accounting errors that were incorporated in public filings over multiple reporting periods and that resulted in the overstatement of pretax income by $235 million. The SEC's order finds that the accounting errors included misstatements concerning Hertz's expenses related to wrecked vehicles, incorrect amortization of vehicle licenses and registrations, and an allowance for uncollectible receivables. The SEC's order further finds that Kapur approved accounting methodology changes in these areas, which contributed to errors that overstated pretax income by approximately $21 million. In addition, the order finds that Kapur sold Hertz Global stock during the relevant period.
Without admitting or denying its findings, Kapur consented to the SEC's order, which finds that he violated the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, as well as the books and records and internal controls provisions of Section 13(b)(5) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 13b2-1 thereunder, and aided and abetted violations by Hertz Global and its wholly-owned subsidiary The Hertz Corp. of reporting, books and records, and internal accounting controls provisions of the Exchange Act and relevant rules thereunder. The SEC's order requires Kapur to cease and desist from further violations of the charged provisions, and to pay disgorgement of $18,611, prejudgment interest of $3,998, and a penalty of $75,000. Kapur also agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC's order permits Kapur to apply for reinstatement after two years.
In December 2018, Hertz agreed to pay $16 million to settle related fraud and other charges brought by the SEC.
The SEC's continuing investigation is being conducted by Jess Velona, Kenneth Byrne, Christopher Mele, and Adam Grace of the New York Regional Office, and is being supervised by Sanjay Wadhwa.