A US-based furniture retailer has agreed to pay $1.5 million to resolve a lawsuit filed by the US Securities and Exchange Commission (SEC) over alleged accounting violations.
The SEC's complaint, submitted to the US District Court in Connecticut on October 29, claims that the company, Lovesac and two former employees, Donna Dellomo (former CFO) and Yoon Um (former controller), mishandled the recording of shipping expenses, impacting the company's financial records for fiscal year 2023.
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According to the SEC, Dellomo and Um did not properly document $2.2 million in shipping costs incurred during 2023, postponing their recording until the first quarter of fiscal 2024. This misstatement allegedly affected key financial metrics and avoided a restatement of the company's SEC filings.
The SEC also accused Dellomo of withholding information from auditors and knowingly signing misleading documentation submitted to the SEC. Additionally, the SEC pointed to a lack of adequate internal controls within Lovesac to prevent such accounting discrepancies.
In response, Lovesac has accepted a final judgment to pay the $1.5 million civil penalty and has agreed to a permanent injunction to prevent future violations. The company noted it had 'voluntarily self-reported and cooperated fully' with the SEC.
Source: www.furnituretoday.com