Washington, DC (STL.News) The Securities and Exchange Commission today charged Joseph Jackson and Colm Callan, respectively the former CEO and CFO of WageWorks Inc. with making false and misleading statements and omissions, including to the company’s auditors, that resulted in the company’s improper recognition of revenue related to a contract with a large public-sector client. The settlements with both individuals include reimbursement of certain incentive-based compensation from the period during which the misconduct took place.
According to the SEC’s order, in March 2016, WageWorks, a provider of Flexible Spending Account services, signed a contract with a large client to process benefits claims for certain public-sector employees. The order finds that on multiple occasions after the contract was signed, the client’s employees told WageWorks that it did not intend to pay for certain development and transition work associated with the contract. As stated in the order, despite these statements, both Callan and Jackson believed that WageWorks was entitled to be paid for this work, so Callan directed WageWorks to recognize $3.6 million in revenue related to the development and transition work. According to the order, despite repeated questioning by WageWorks’s internal accounting staff and external auditor about the status of the $3.6 million that WageWorks had booked but not yet received, Callan and Jackson consistently failed to disclose that the client’s employees had denied that it owed these amounts to WageWorks.