The Securities and Exchange Commission (SEC) filed a lawsuit against Iconix Brand Group and its former top executives for allegedly committing fraud.
In its complaint, the SEC alleged that Iconix intentionally committed accounting and reporting fraud through its former senior executives. They violated the Securities and Exchanges Act of 1934 and the Securites Act of 1933.
Specific allegations against Iconix and its former executives
According to the Commission, the company reported false revenues and manipulated reported earnings through transactions with a joint venture partner.
Iconix’s former CEO Neil Cole and former COO Seth Horowitz allegedly created a fraudulent scheme to create false revenue. They artificially recorded inflated purchased prices related to the company’s transactions with its joint venture partner.
As a result of their fraudulent scheme, Iconix was able to beat or meet the consensus estimates of Wall Street analysts particularly in the second and third quarters of 2014.
