SEC: Remediation Helps Avoid Penalties

The Securities and Exchange Commission (SEC) recently settled fraud charges with HeadSpin, Inc., a privately-owned tech company. HeadSpin, Inc. made significant remedial efforts in the midst of an internal investigation as a result of misconduct by its now-former CEO.

Manish Lachwani, HeadSpin’s former CEO engaged in fraudulent activity to increase the company’s value to over $1 billion by “falsely inflating its key financial metrics and doctoring internal sales records.”

HeadSpin resolved SEC charges and implemented remedial policies such as hiring new senior management, expanding its board, and instituting processes and procedures designed to ensure transparency and accuracy of deal reporting and associated revenues.

David Rosenfield, who specializes in White Collar Defense and SEC Investigations at Warren Law Group states, “This matter highlights the need for companies to have robust policies and procedures in place designed to prevent and/or uncover fraudulent activities. Even with preventative measures in place, if widespread fraud is later uncovered (as was the case with HeadSpin), putting remedial policies in place to fill the blind spot may be seen as cooperation in the eyes of the SEC. Frankly, the SEC may require the implementation of such remedial policies anyway; a proactive approach may be doubly beneficial.” 

If your company is under investigation by the SEC for misconduct, it may be beneficial for the company to cooperate in the investigation. Only an experienced attorney should guide you through this regulatory quagmire. It is critical you seek proper legal counsel to guide you through this process and ensure any remedial actions are in compliance with the SEC’s demands. To schedule your complimentary consultation with an attorney at Warren Law Group, email, or call (866) WLGROUP.



Warren Law Group defends individuals and companies in all types of litigation. Our team has decades of experience in all types of litigation, white collar defense, securities litigation, and financial services enforcement proceedings.