Former World Wrestling Entertainment Inc. boss Vince McMahon on Friday settled charges with the Securities and Exchange Commission over disclosure issues.
The Securities and Exchange Commission announced the settlement with McMahon, the former executive chairman and CEO of WWE, for signing two settlement agreements, one in 2019 and one in 2022, on behalf of himself and WWE without disclosing the agreements to WWE’s Board of Directors, legal department, accountants, financial reporting personnel, or auditor.
Without admitting or denying the SEC’s findings, McMahon agreed to pay a $400,000 civil penalty and reimburse WWE $1,330,915.90.
The SEC alleged that doing so circumvented WWE’s system of internal accounting controls and caused material misstatements in WWE’s 2018 and 2021 financial statements.
“Company executives cannot enter into material agreements on behalf of the company they serve and withhold that information from the company’s control functions and auditor,” said Thomas Smith Jr., associate regional director in the New York Regional Office.
One settlement agreement required McMahon to pay a former employee $3 million in exchange for an agreement to not disclose her relationship with McMahon and not file claims against WWE and McMahon. A second agreement obligated McMahon to pay a former WWE independent contractor $7.5 million in exchange for an agreement to not disclose her allegations against McMahon and not file claims against WWE and McMahon, according to the SEC.
The order found that because McMahon didn’t disclose the agreements to WWE, WWE did not evaluate the disclosure implications or the appropriate accounting for these transactions in its financial statements. The SEC’s order found that, because the payments required by the 2019 and 2022 agreements were not recorded, WWE overstated its 2018 net income by about 8% and its 2021 net income by about 1.7%.
McMahon on Friday chalked the whole thing up to minor accounting mistakes, NBC reported.
“The case is closed. Today ends nearly three years of investigation by different governmental agencies. There has been a great deal of speculation about what exactly the government was investigating and what the outcome would be,” McMahon said in a statement. “As today’s resolution shows, much of that speculation was misguided and misleading. In the end, there was never anything more to this than minor accounting errors with regard to some personal payments that I made several years ago while I was CEO of WWE. I’m thrilled that I can now put all this behind me.”
McMahon consented to the the SEC’s order finding that he violated the Securities Exchange Act by knowingly circumventing WWE’s internal accounting controls and that he directly or indirectly made or caused to be made false or misleading statements to WWE’s auditor.
