Former Hertz Chairman and CEO Mark Frissora agreed to repay the car rental company nearly $2 million in incentive-based compensation stemming from charges that he facilitated fraudulent financial statements. The charges – related to a Securities and Exchange Commission (SEC) investigation – were filed on Aug. 13 in federal court in New Jersey. Frissora agreed to a settlement without admitting guilt.
The charges against Frissora included aiding and abetting Hertz’s financial reporting, books and records violations along with violating the Sarbanes-Oxley Act when he failed to repay Hertz his incentive-based compensation. He served as Hertz’s CEO for more than eight years, resigning in September 2014 after accounting problems surfaced at the company.
Must repay Hertz nearly $2 million, pay $200,000 civil penalty
According to the SEC, Frissora pressured Hertz employees to “find money” when the company’s 2013 financial results fell short of forecasts. The SEC claims that Hertz employees reviewed cash reserve accounts, leading them to create accounting discrepancies and inaccurate financial reports.
Other accusations against Frissora include that he:
- Approved that the company reaffirm its earnings guidance in November 2013 even though Hertz had projected lower earnings per share. This allegedly led to revisions in the company’s 2014 financial results. With the restated earnings, the company’s previously reported pre-tax income shrank by $235 million.
- Ordered Hertz to keep rental cars within its fleet for longer periods, which lowered depreciation expenses and increased risks due to the use of older vehicles. Investors were not aware of this change.
Frissora agreed to a judgment that prohibits him from committing any future securities law violations. He also must repay $1.98 million in incentive-based compensation and pay a $200,000 civil penalty.
As we have noted in recent posts, the SEC is stepping up enforcement efforts on multiple fronts, including accounting practices and cryptocurrency exchanges. If you have questions or concerns about civil or criminal charges related to financial matters, speak to a securities law attorney as soon as possible. The securities law attorneys at Ford O’Brien represent clients in New York and Nationwide.
Source: Forbes, “Former Hertz CEO Charged In Accounting Scandal,” Aug. 13, 2020