Connected Car
According to the SEC, had the company not reduced the accrual for bonuses, it “would have missed consensus EPS estimates by one penny.” Gentex was ordered to pay a civil money penalty of $4 million and Nash to pay $75,000. These charges represent yet another case resulting from SEC Enforcement’s “Earnings-Per-Share Initiative,” which applies risk-based data analytics to detect potential violations from earnings management, among other things. In April 2022, SEC brought settled charges against Rollins, Inc., a termite and pest control company—think “Orkin”—for earnings management, a case also arising out of SEC Enforcement’s EPS Initiative. In essence, the SEC alleged that the company adjusted the amounts in several of its corporate reserves, without support or documentation, to bump up its EPS to meet analysts’ consensus EPS estimates for two quarters. The company would otherwise have missed those consensus estimates by a penny in each quarter.