A company that provided cloud communications products and services agreed to settle SEC charges of misleading investors with inaccurate revenue projections. Two of the company's former executives also reached settlements for the same misconduct.
As alleged in the SEC Order, Sonus Networks, Inc. ("Sonus") represented in a press release and on an earnings call that the company was on track to meet certain revenue projections. Sonus' former CFO was quoted in the press release and made statements on the earnings call projecting a $74 million revenue estimate for the first quarter of 2015 despite allegedly being aware of various red flags that should have cast doubt on this target. Sonus' former Vice President of Global Sales supported the estimate as reasonable while allegedly knowing that it was materially misleading. Approximately a week before the end of the quarter, Sonus announced that it was lowering the Q1 estimate to $47-50 million and its stock price fell by over 33 percent.
According to the SEC, Sonus and the executives should have recognized that, as a result of pulling forward deals into 2014 in order to meet earlier revenue projections, the Q1 2015 earnings would be undermined and the estimate misleading.
To settle the charges, Sonus agreed to pay $1.9 million, the former CFO agreed to pay $30,000, and the former Vice President agreed to pay $40,000.
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