In a statement the U.S. Securities and Exchange Commission said, Healthcare Services Group Inc has agreed to pay a $6 million fine to settle civil charges for its alleged failure to account for legal settlements with its employees, which resulted in inflated quarterly results.
According to the SEC, the Bensalem, Pennsylvania-based Healthcare Services Group did not sufficiently allocate enough money in 2014 and 2015 for expected settlements of class-action litigation claiming it violated federal and state wage-and-hour laws.
Had it properly recorded its settlement costs, it would have missed Wall Street earnings forecasts by at least four times.
The SEC called the settlement the third in its EPS Imitative, which uses risk-based data analysis to uncover potential accounting and disclosure violations resulting from so-called “earnings management,” among other things.
John Shea, Healthcare Services’ chief financial officer since 2012, will pay a related $50,000 civil fine and accepted a two-year suspension from appearing before the SEC as an accountant.
According to Healthcare Services Group, Shea is set to become the chief administrative officer on September 1. It did not immediately respond to a request for additional comment.
None of the defendants admitted or denied wrongdoing. In a statement, Ted Wahl, Healthcare Services’ Chief Executive said, the company had cooperated with the SEC, and was committed to strong internal controls, compliance practices and corporate governance.