U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25934 / January 30, 2024
Accounting and Auditing Enforcement Release No. 4485 / January 30, 2024
Securities and Exchange Commission v. Rosenberger et al., Civil Action No. 1:22-cv-04736 (DLC) (S.D.N.Y. filed June 7, 2022)
Court Grants Partial Summary Judgment Against CFO and Controller
On January 26, 2024, the U.S. District Court for the Southern District of New York granted the SEC partial summary judgment against former Synchronoss Technologies, Inc. (“Synchronoss”) CFO, Karen Rosenberger, and Synchronoss controller, Joanna Lanni.
According to the SEC’s complaint, Rosenberger and Lanni engaged in accounting misconduct which resulted in the overstatement of revenue by Synchronoss. The SEC alleged that Rosenberger aided and abetted Synchronoss’s public filing of materially false financial statements with respect to five transactions Synchronoss later restated and engaged in fraud with respect to three of them—two transactions with one of Synchronoss’s largest customers and one transaction in which Synchronoss acquired another business. The SEC further alleged that Rosenberger sought to cover up her and Synchronoss’s misconduct by lying to Synchronoss’s auditor in connection with those transactions, falsifying Synchronoss’s books and records, and by failing to implement or maintain, and circumventing, Synchronoss’s system of accounting controls. As to Lanni, the SEC alleged that she aided and abetted Synchronoss’s improper revenue recognition, falsified Synchronoss’s books and records, and circumvented Synchronoss’s system of accounting controls in connection with one of these five transactions, by providing a materially misleading memorandum to the auditor regarding one transaction. The Complaint alleged that impact of the improper accounting was material, and in certain instances, allowed Synchronoss to meet revenue expectations it otherwise would not have met.
The SEC’s complaint charged Rosenberger with violating Sections 10(b), 13(a) and 13(b)(5) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 10b-5, 13a-14, 13b2-1, and 13b2-2 thereunder; violating Section 304 of the Sarbanes-Oxley Act of 2002 (“SOX”); and aiding and abetting Synchronoss’s violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act. The SEC’s complaint charged Lanni with violating Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder; and aiding and abetting Synchronoss’s violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder.
The SEC moved for summary judgment against Rosenberger on all of its claims, with respect to one of the five charged transactions, and against Rosenberger and Lanni on its Rule 13b2-1 claim with respect to another transaction. The Court granted the SEC’s motion in its entirety, finding, among other things, Rosenberger liable for fraud and liable under SOX 304 for reimbursement of $430,741 to Synchronoss. The Court simultaneously denied in their entirety Rosenberger’s and Lanni’s cross motions for summary judgment.
The litigation against Rosenberger and Lanni is being led by Hayden Brockett, Theresa Gue, Lindsay S. Moilanen, and Richard G. Primoff under the supervision of Sheldon L. Pollock.