SEC Charges Outsourced CFO with Accounting Controls Deficiencies
Litigation Release No. 24265 / September 12, 2018
Accounting and Auditing Enforcement Release No. 3971 / September 12, 2018
Securities and Exchange Commission v. Adam C. Wasserman, No. 18-cv-23729 (S.D. Fla. filed Sept. 12, 2018)
The Securities and Exchange Commission has charged the U.S.-based former CFO of a public company based in China with improperly commingling corporate and personal funds as part of a practice to transfer funds to the U.S. while avoiding foreign currency controls.
According to the SEC's complaint, over a 20-month period, Adam C. Wasserman used a personal account to transfer over $400,000 in corporate funds from China to the U.S. to pay the Chinese company's U.S. expenses. The SEC's complaint also alleges that Wasserman had previously engaged in the same practice with at least two other China-based public companies. The SEC's complaint alleges that by repeatedly commingling corporate funds with his own personal funds Wasserman put the company's assets at risk for misuse and loss and, through his conduct, Wasserman knowingly failed to implement a system of internal accounting controls in violation of Section 13(b)(5) of the Securities Exchange Act of 1934.
Wasserman agreed to settle the charges without admitting or denying the allegations of the complaint and consented to the entry of a final judgment that permanently enjoins him from future violations of Section 13(b)(5) of the Exchange Act, orders him to pay a civil penalty of $20,000, and bars him from serving as an officer or director of a public company for five years. The settlement is subject to court approval.
The SEC's investigation was conducted by Gregory C. Padgett and Cecilia B. Connor and supervised by Amy L. Friedman, with assistance from Leigh Barrett, Jan M. Folena, James E. Smith, and Janet S. Yang.