📋 Tender Overview
The Securities and Exchange Commission charged DXC Technology Company an IT services company in Ashburn Virginia with making misleading disclosures about its non-GAAP financial performance in multiple reporting periods from 2018 until early 2020. According to the SECs order 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 improperly excluding them from its non-GAAP earnings. While DXC publicly claimed that its non-GAAP metrics allowed investors to better understand the financial performance of DXC the SECs order finds that the companys non-GAAP disclosure controls and procedures were inadequate to ensure that the companys expense classifications were consistent with its own public description of TSI costs. According to the order by misclassifying TSI costs DXC materially overstated its non-GAAP net income in three fiscal quarters. DXC also failed to evaluate the companys non-GAAP disclosures concerning TSI costs. Issuers that choose to report non-GAAP financial metrics must accurately describe those metrics in their public disclosures said Mark Cave Associate Director of the SECs Division of Enforcement. As the order finds DXCs informal procedures and controls were not up to the task and as a result investors were repeatedly misled about its non-GAAP financial performance.The Commissions order finds that DXC negligently violated the anti-fraud provisions of the Securities Act of 1933 and reporting provisions of the federal securities laws. Without admitting or denying the findings in the order DXC consented to a cease-and-desist order to pay an 8 million penalty and to undertake to develop and implement appropriate non-GAAP policies and disclosure controls and procedures. In determining to accept DXCs offer of settlement the SEC considered DXCs cooperation and remedial actions.
