VMware will pay $8M to resolve SEC complaints about its financial reporting

In order to resolve Securities and Exchange Commission (SEC) charges that it deceived investors by concealing its subpar financial performance, VMware will pay $8 million.

The SEC asserted in an order issued on Monday that the California-based cloud service provider sought to conceal its deteriorating performance during its 2019 and 2020 fiscal years by delaying the delivery of license keys that customers had acquired until after quarter-end. Due to a slowdown in business, this allegedly allowed the corporation to move tens of millions of dollars in sales to later quarters of the fiscal year 2020.

The SEC, which considered the omissions substantial, asserted that the company's intention was to seem as though it was reaching its financial expectations.

The SEC said that VMware neglected to adequately disclose its methods and results in its reports, claiming simply that the backlog of deliveries was "'managed based upon multiple considerations.'"

According to the SEC, the firm broke both the reporting requirements of federal securities laws and the Securities Act of 1933. VMware consented to a cease-and-desist order in addition to paying the fine.

The business did not accept or reject the conclusions reached by the body.

According to Mark Cave, associate director of the SEC's Division of Enforcement, in a press release, "By making misleading statements about order management practices, VMware deprived investors of important information about its financial performance. Such conduct is incompatible with an issuer’s disclosure obligations under the federal securities laws."

VMware said in a statement that the SEC did not find that the business had violated widely accepted accounting practices (GAAP).

The business said that "The SEC staff has confirmed that it does not intend to recommend enforcement action against any current or former VMware officers or other member of management in connection with the investigation, and this settlement concludes the matter. VMware believes this settlement is the right course of action for the company and continues to be committed to operating at the highest level of integrity, including with respect to its public filings and communications with investors."

By fLEXI tEAM