SEC Order Finds That HP Violated Antifraud, Reporting And Disclosure Controls Provisions Of Federal Securities Laws. HP To Pay $6 million Penalty.
Kehoe Law Firm, P.C. is making investors aware that on September 30, 2020, the Securities and Exchange Commission announced charges against technology company HP Inc. for misleading investors by failing to disclose the impact of sales practices undertaken in an effort to meet quarterly sales and earnings targets. HP has agreed to pay $6 million to settle the charges.
According to the SEC’s order, from early 2015 through the middle of 2016, in an effort to meet quarterly sales targets, regional managers at HP used a variety of incentives to accelerate, or “pull-in” to the current quarter, sales of printing supplies that they otherwise expected to materialize in later quarters.
The order finds that, in an effort to meet revenue and earnings targets, managers in one HP region sold printing supplies at substantial discounts to resellers known to sell HP products outside of the resellers’ designated territories, in violation of HP policy and distributor agreements. The order also found that HP failed to disclose known trends and uncertainties associated with these sales practices, as well as that HP failed to disclose that its internal channel inventory ranges, which it described in quarterly earnings calls, included only channel inventory held by channel partners to which HP sold directly and not by channel partners further down the distribution chain, thereby disclosing only a partial and incomplete picture of HP’s channel health.
As set forth in the order, HP changed its go-to-market model in part to address these undisclosed sales practices and undertook a channel inventory reduction that reduced its net revenue by approximately $450 million during the third and fourth quarters of 2016.
The SEC’s order finds that HP violated the antifraud, reporting and disclosure controls provisions of the federal securities laws. Without admitting or denying the SEC’s findings, HP consented to a cease-and-desist order and to pay a $6 million penalty.
Source: U.S. Securities and Exchange Commission – SEC.gov