In the Matter of Surgalign Holdings, Inc., et al. Admin. Proc. File No. 3-20945
Jan. 5, 2023
On August 3, 2022, the Commission instituted and simultaneously settled administrative and cease-and-desist proceedings (the “Order”) against Surgalign Holdings, Inc. and Robert P. Jordheim (collectively, the “Respondents”). In the Order, the Commission found that From 2015 through 2019, RTI (now known as Surgalign Holdings, Inc.) shipped orders weeks or months before its customers had originally requested delivery, thereby pulling sales forward from future quarters, to address projected quarterly revenue shortfalls. In some instances, RTI did so after requesting and obtaining customer permission; in other instances, RTI shipped orders early without customer approval and then prematurely recognized revenue for the sales. In multiple quarters, RTI would not have met its revenue guidance without these undisclosed pull-forwards. RTI and its former senior management, including its CFO until September 2017, Robert Jordheim, did not disclose to investors that RTI’s apparent success at achieving its revenue guidance resulted from its reliance on pull-forwards, and they did not disclose the known uncertainty that this practice created for RTI’s future revenue streams. In 2020, RTI issued a restatement to correct, among other things, its premature recognition of revenue, in violation of generally accepted accounting principles (GAAP), for orders shipped early to customers without their approval. The Commission ordered the Respondents to pay $2,075,000.00 in civil money penalties to the Commission. The Commission also created a Fair Fund, pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid can be distributed to harmed investors (the “Fair Fund”). See the Commission’s Order: 33-11088.
The Fair Fund includes the $2,075,000.00 paid by the Respondents. The Fair Fund and has been deposited in an interest-bearing account at the U.S. Department of the Treasury’s Bureau of the Fiscal Service, and any interest accrued will be added to the Fair Fund.
On March 1, 2023, the Commission issued an order appointing Heffler, Radetich & Saitta, LLP, as the Tax Administrator of the Fair Fund. See the Commission’s Order: Release No. 34-96997.
On September 28, 2023, the Commission issued an order appointing Epiq Class Action & Claims Solutions, Inc., as the Fund Administrator to oversee the administration and distribution of the Fair Fund, and set the administrator’s bond amount. See the Commission’s Order: Release No. 34-98600.
For more information, please contact the Commission:
Office of Distributions