SEC claws back Saba Software CEO pay over accounting fraud

(Reuters) - The U.S. Securities and Exchange Commission on Wednesday said Saba Software Inc's (SABA.PK) former chief executive will repay his Silicon Valley-based company $2.57 million of bonuses, incentive pay and stock sale profits as part of a settlement over an accounting fraud.

Babak "Bobby" Yazdani, the company's chief executive, was not charged with misconduct. In agreeing to the clawback, he neither admitted nor denied the SEC's findings against Saba, which agreed to a $1.75 million civil fine.

The settlements resolved charges that Saba managers in the United States directed consultants in India to falsify timesheets by recording time they had yet to work or failing to record hours worked to conceal budget overruns.

According to the regulator, Saba allowed timesheets to be falsified so that it could hit quarterly revenue and margin targets. The SEC said this resulted in the Redwood Shores, California-based company overstating pre-tax earnings by about $70 million from October 2007 to January 2012.

Without admitting wrongdoing, Saba also agreed to pay further penalties if it fails to file earnings restatements for the affected periods this year.

The SEC also said the Saba vice presidents who directed the scheme, Patrick Farrell and Sajeev Menon, agreed to pay $85,017 and $69,621, respectively, to settle related charges. Farrell and Menon also did not admit wrongdoing.

The clawback provision of the Sarbanes-Oxley corporate governance law can compel executives to return money to their companies, for the benefit of shareholders, that they received while shareholders were being misled.

Saba, its lawyer and lawyers for Yazdani and Menon did not immediately respond to requests for comment. A lawyer for Farrell declined to comment.

The SEC said Yazdani left Saba in 2013, while Farrell and Menon left the company in 2012.

(Reporting by Jonathan Stempel in New York, editing by G Crosse)