Ex-Hertz CEO to pay $2m over accounting fraud charges
The Securities and Exchange Commission (SEC) has charged Frissora with aiding and abetting the company in a series of accounting violations.
The US regulator alleged that as Hertz’s financial results
fell short of its forecasts throughout 2013, Frissora pressured subordinates to
‘find money,’ principally by re-analysing reserve accounts, causing Hertz’s
staff to make accounting changes that rendered the company’s financial reports
materially inaccurate.
The SEC also claimed that Frissora led Hertz to hold rental
cars in its fleet for longer periods and thus lower its depreciation expenses,
without properly disclosing the change – and the risks of relying on older
vehicles – to investors.
In addition, the SEC alleged that Frissora approved Hertz’s
reaffirming its earnings guidance in November 2013, despite Hertz’s internal
calculations that projected lower earnings per share figures. Hertz revised its
financial results in 2014 and restated them in July 2015, reducing its
previously reported pretax income by $235m.
Without admitting or denying the allegations, Frissora
consented to a judgment permanently enjoining him from aiding and abetting any
future violations of the applicable federal securities laws, requiring him to
reimburse Hertz for $1,982,654 in bonus and other incentive-based compensation
and requiring him to pay a $200,000 civil penalty. The settlement is subject to court approval.
Marc Berger, director of the SEC’s New York regional office,
said: ‘Investors are entitled to accurate and reliable disclosures of material
information about a company’s financial condition.
‘We are committed to holding corporate executives
accountable when their actions deprive investors of such information.’
In December 2018, Hertz agreed to pay $16m to settle related
fraud and other charges brought by the SEC and in December 2019, the SEC issued
an order against Hertz former controller
Jatindar Kapur.
Hertz business model has been badly impacted by the
coronavirus crisis, which has seen a collapse in consumer travel and the need
for car hire, and the company recently filed for bankruptcy.
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