The Securities and Exchange Commission today charged GTT Communications, Inc. with failing to disclose material information about unsupported adjustments the company made in several Commission filings, which increased GTT’s reported operating income by at least 15 percent in three quarters from 2019 through 2020. The SEC’s order credits GTT with promptly self-reporting, undertaking affirmative remedial measures, and providing substantial cooperation to the SEC, and does not order a civil penalty against GTT.
According to the SEC’s order, after experiencing rapid growth through a series of acquisitions beginning in 2017, GTT struggled to reconcile data that was being generated by two of the company’s key operational systems. Over time, the two systems began to show a persistent discrepancy between actual expenses, as reflected in invoices received from vendors, and the company’s expected expenses. GTT was unable to reconcile these two systems and knew that it lacked sufficient information necessary to accurately record and report certain expenses. The SEC’s order finds that GTT nonetheless made unsupported adjustments of more than $35 million that lowered its reported cost-of-revenue, thereby increasing its reported operating income, but failed to disclose material facts about these adjustments.
Source: SEC Charges GTT Communications for Disclosure Failures
