On September 8, the SEC charged a sports supplements and nutrition company, its former audit committee chairman and three of its current and former executive officers with committing accounting, disclosure and other violations of federal securities laws. The charges arose primarily from the company’s failure to properly report as compensation perks provided to its executives.

According to the SEC, the company failed to disclose nearly half a million dollars of perks related to automobiles, apparel, meals, golf club memberships and personal tax and legal services, among other things. The SEC’s investigation found other disclosure and accounting irregularities, including failures on the part of the company to implement appropriate internal accounting controls and sufficient policies to identify and disclose related party transactions, as well as violations of Rule 302 of Regulation S-T, which requires that signature pages to electronic filings with the SEC be manually signed, and that filers retain manually executed signature pages for five years.

In addition, according to Andrew J. Ceresney, Director of the SEC’s Division of Enforcement, the company’s former audit committee chairman “subjected himself to liability when he substituted his wrong interpretation of SEC rules for the views of experts the company had hired, resulting in incorrect disclosure.” The SEC also found that various transactions in which third parties agreed to pay the company’s obligations to its vendors in exchange for company stock violated Section 5 of the Securities Act of 1933, as amended, because the shares were sold without an effective registration statement, and were not sold in accordance with an exemption from registration.

The parties settled the charges (without admitting or denying the SEC’s findings). As part of the settlement, the company agreed to pay a $700,000 penalty; the CEO, who received a portion of the unreported compensation, agreed to pay a $150,000 penalty; a former CFO of the company and its former audit committee chairman each agreed to pay a $30,000 penalty; and each of the two former CFOs charged with wrongdoing were suspended from practicing as an accountant on behalf of any SEC-regulated entities, with a right to reapply after two or three years.

Click here to view the SEC’s press release and orders against the company and individuals.