Public Companies Update – April One-Minute Reads

SEC announces settlement for misleading non-GAAP disclosures

On March 14, 2023, the Securities and Exchange Commission announced settled charges against DXC Technology, an IT services company, for misleading disclosures about its non-generally accepted accounting principles (non-GAAP) financial performance from 2018 until early 2020. In its order, the SEC found that "DXC materially increased its reported non-GAAP net income by negligently misclassifying tens of millions of dollars of expenses as non-GAAP adjustments for so-called transaction, separation, and integration-related (TSI) costs," and that the company's non-GAAP disclosure controls were inadequate to ensure that the company's expense classifications were consistent with the description of TSI in the company's public disclosures. DXC agreed to pay a civil penalty of $8 million. For more information, refer to this Cooley PubCo blog post about the DXC settlement.