The SEC charged the company with “engaging in a fraudulent scheme to overstate revenue by approximately $50 million and making false and misleading statements about key performance metrics.” Investigators said the scheme centered on non-cash transactions between February 2014 and February 2016.
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The case comes at a precarious moment for media measurement, especially in the linear television business, which is under siege by streaming, social media and a host of other forces. As live tune-in shrinks, measurement companies face intensifying pressure to offer more comprehensive tools to preserve TV networks’ $75 billion-a-year advertising business.
Traditional power Nielsen, meanwhile, has faced its own corporate drama as well over the past year. ComScore aimed to take an aggressive run at Nielsen by acquiring Rentrak in 2016, but the combination hasn’t gained much meaningful new traction in TV. Interestingly, on the movie side, Rentrak/ComScore did actually manage to topple the longtime leader in box office tracking, Nielsen-EDI. And the company remains a top measurement company in the digital arena.
At the direction of Matta, the SEC said, ComScore employees negotiated data agreements with clients with no money changing hands. Matta and others misled investors, the industry and the public, lying about the state of their business and artificially exceeding analysts’ estimates and creating what the SEC called “the illusion of smooth and steady growth.”
In a statement about the settlement, the company emphasized that the allegations had previously been disclosed and all conduct revealed by the SEC took place under Matta and prior management. The company said it “neither admits nor denies” the SEC allegations. Under the settlement, Matta has agreed to repay $2.1 million to ComScore and separately pay the SEC a $700,000 fine and agree not to serve as an officer or director of a public company for 10 years.
ComScore stock, which has plummeted in recent months as the fraud was exposed, was down 4% in late-day trading Tuesday at $2.24 a share. It started 2019 at nearly $15 a share and rose to almost $24 before many investors headed to the sidelines.