Neil Cole, Iconix Brand Group’s founder and former CEO, has been charged with accounting fraud while Seth Horowitz, Iconix’s former COO, pled guilty to related charges.
According to an indictment unsealed in federal court in Manhattan, the company inflated earnings and revenue by inducing several brands to overpay Iconix in royalty fees. Iconix would then repay those companies, but not before the “illegal secret agreements” allowed Iconix to beat Wall Street analysts’ estimates for revenue and profit in part of 2013 and all of 2014.
Cole was charged with 10 criminal counts, including securities fraud, conspiracy and making false statements to the U.S. Securities and Exchange Commission. Horowitz pled guilty to five counts, also including securities fraud, conspiracy and false SEC filings, under an agreement with prosecutors. Cole left the Iconix in August 2015 and Horowitz left in April 2015 after a two-year tenure.
In a statement, Iconix said it had reached an agreement with the U.S. Securities and Exchange Commission to resolve the investigation into certain accounting and reporting issues occurring during 2013 through the third quarter of 2015.
As part of the settlement, which is subject to court approval and was previously disclosed in the company’s most recent Form 10-Q filing, Iconix has agreed to pay a civil penalty of $5.5 million to fully resolve all outstanding SEC claims
In agreeing to settle with the SEC, Iconix has neither admitted nor denied the SEC’s allegations.
“I am pleased that we were able to resolve this legacy matter that arose under previous management over four years ago,” said Bob Galvin, chief executive officer and president. “Working alongside our Board of Directors over the past several years, Iconix has put in place significant, additional measures to ensure that the company’s financial reporting, compliance, and governance practices fully meet legal and good governance standards. In putting this legacy legal matter behind us, the Iconix team members are excited to continue to be able to focus on what we do best – managing and growing iconic brands.”
In addition to today’s announcement with respect to the company’s SEC matter, the United States Attorney’s Office for the Southern District of New York unsealed charges today against former individual officers of the company who resigned from Iconix over four years ago. In agreeing to settle with the SEC, Iconix has neither admitted nor denied the SEC’s allegations.
“I am pleased that we were able to resolve this legacy matter that arose under previous management over four years ago,” said Bob Galvin, Chief Executive Officer and President. “Working alongside our Board of Directors over the past several years, Iconix has put in place significant, additional measures to ensure that the company’s financial reporting, compliance, and governance practices fully meet legal and good governance standards. In putting this legacy legal matter behind us, the Iconix team members are excited to continue to be able to focus on what we do best – managing and growing iconic brands.”
In addition to today’s announcement with respect to the company’s SEC matter, the United States Attorney’s Office for the Southern District of New York unsealed charges today against former individual officers of the company who resigned from Iconix over four years ago. The company will continue to cooperate with the United States Attorney’s Office and the SEC with respect to cases against these former individual officers.”
Iconix Brand Group owns, licenses and markets the following brands: Candie’s, Bongo, Joe Boxer, Rampage, Mudd, Mossimo, London Fog, Ocean Pacific, Danskin, Rocawear, Cannon, Royal Velvet, Fieldcrest, Charisma, Starter, Waverly, Zoo York, Umbro, Lee Cooper, Ecko Unltd., Marc Ecko, Artful Dodger and Hydraulic. In addition, Iconix owns interests in the Material Girl, Ed Hardy, Truth Or Dare, Modern Amusement, Buffalo and Pony brands.
