SEC Obtains Final Judgment Against Synchronoss CFO for Role in Accounting Misconduct

June 14, 2024/US SEC

On June 14, 2024, the U.S. District Court for the Southern District of New York entered a final judgment against Karen Rosenberger, imposing an injunction and officer and director bar, and also ordering her to pay civil monetary penalties and reimburse Synchronoss Technologies, Inc. (“Synchronoss”) for certain compensation.

According to the SEC’s complaint, Rosenberger engaged in accounting misconduct which resulted in the overstatement of revenue by Synchronoss. The SEC alleged that Rosenberger aided and abetted Synchronoss’s public filing of materially false financial statements with respect to five transactions. Synchronoss later restated and allegedly engaged in fraud with respect to three of them—two transactions with one of Synchronoss’s largest customers and one transaction in which Synchronoss acquired another business. The SEC further alleged that Rosenberger sought to cover up her and Synchronoss’s misconduct by lying to Synchronoss’s auditor in connection with those transactions, falsifying books and records, and by failing to implement or maintain, and circumventing, Synchronoss’s system of accounting controls. The Complaint alleged that the impact of the improper accounting was material, and in certain instances, allowed Synchronoss to meet revenue expectations it otherwise would not have met.

The SEC’s complaint charged Rosenberger with violating Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2 thereunder; violating Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX”); and aiding and abetting Synchronoss’s violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. On January 26, 2024, the Court granted the SEC’s motion for partial summary judgment against Rosenberger finding that Rosenberger violated numerous provisions of the federal securities laws. Without admitting or denying the allegations of the complaint, Rosenberger consented to a final judgment in which she agreed to be permanently enjoined from violations of the charged provisions, barred from serving as an officer and director, agreed to pay $125,000 in civil monetary penalties, and agreed to reimburse Synchronoss over $430,000 in compensation pursuant to SOX 304. On June 14, 2024, the Court entered the final judgment.

The litigation is being led by Hayden Brockett, Theresa Gue, Lindsay S. Moilanen, and Richard G. Primoff under the supervision of Sheldon L. Pollock and Preethi Krishnamurthy.

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