U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23690 / November 18, 2016
Securities and Exchange Commission v. Gavin Campion, Civil Action No. 16-cv-8940 (S.D.N.Y. filed Nov. 17, 2016)
SEC Charges Former KIT Digital Inc. President with Securities Fraud
The Securities and Exchange Commission charged Gavin Campion, the former president of KIT Digital Inc., with securities fraud.
The SEC's complaint, filed in federal court in New York on November 15, alleges that over a one-year period ending in late 2011 Campion - along with Kaleil Isaza Tuzman, then KIT Digital's CEO, and Robin Smyth, then its chief financial officer - caused KIT Digital to recognize more than $25 million in false revenue from at least a dozen sham license agreements that inflated KIT Digital's publicly reported financial results. As a result of this allegedly fraudulent conduct, from approximately 2010 to mid-2012, KIT Digital allegedly filed with the SEC quarterly and annual reports and annual and interim financial statements that falsely and materially overstated the company's revenue, goodwill, and cash equivalents and materially understated its losses by millions of dollars.
The SEC previously charged Smyth and Isaza Tuzman with securities fraud; the litigation is ongoing. In addition, the U.S. Attorney's Office for the Southern District of New York today filed a parallel criminal case against Campion.
The SEC's complaint alleges that Campion violated Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1 thereunder, and aided and abetted violations of Section 17(a) of the Securities Act and Sections 10(b) 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange and Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. The SEC seeks disgorgement of ill-gotten gains plus prejudgment interest and penalties as well as permanent injunctive relief and an officer-and-director bar.
The SEC thanks the U.S. Attorney's Office for the Southern District of New York, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service for their assistance. The SEC's investigation is continuing.