Vince McMahon settles SEC charges over hush money payments as CEO of WWE
The SEC announced Friday that it has settled against former WWE CEO Vince McMahon for making personal payments that “circumvented WWE’s system of internal accounting controls” and caused “material misstatements” in the company’s financial statements for 2018 and 2021.
McMahon consented to the issuance of the SEC’s order finding that he violated the Securities Exchange Act by “knowingly circumventing WWE’s internal accounting controls and that he directly or indirectly made false or misleading statements to WWE’s auditor had taken or had taken,” the agency said. “Without admitting or denying the SEC’s findings,” McMahon agreed to cease and desist from violating these provisions, pay a $400,000 civil penalty and reimburse WWE $1.33 million on grounds of Section 304(a) of the Sarbanes-Oxley Act.
According to the SEC’s order, McMahon entered into a settlement agreement that required him to pay a former WWE employee $3 million in exchange for the ex-employee’s agreement not to disclose her relationship with McMahon and her release of potential claims against WWE and McMahon. A second agreement required McMahon to pay a former WWE independent contractor $7.5 million in exchange for the independent contractor’s agreement not to disclose her allegations against McMahon and her release of potential claims against WWE and McMahon.
In one statement about X On Friday, McMahon wrote: “The matter is closed. Today ends almost three years of investigation by various government agencies. There has been much speculation about what exactly the government investigated and what the outcome would be. As today’s resolution shows, much of this speculation has been misleading and misleading. In the end, there was never anything more to it than minor accounting errors regarding some personal payments I made several years ago when I was CEO of WWE. I’m glad I can put all this behind me now.”
McMahon had resigned as CEO of WWE in June 2022 amid an investigation by the company’s board of directors into the alleged hush money payments to women who accused him of sexual misconduct. In March 2023, McMahon reimbursed WWE $17.4 million for costs incurred by the company related to or “arising out of” the investigation conducted by the board’s special committee. As CEO of WWE, McMahon had made personal payments totaling $19.6 million, which should have been recorded as expenses, the company disclosed. Of that, the company said, $14.6 million was related to the alleged misconduct dating back to 2006, while the additional $5 million went to Donald Trump’s charity, the Wall Street Journal. reported.
McMahon returned to WWE as executive chairman in January 2023 to lead efforts to sell the company, which later that year merged with UFC to form TKO Group as a separately traded publicly traded company in a deal engineered by Endeavor .
McMahon resigned from TKO’s board in January 2024 in the wake of allegations from former WWE employee Janel Grant, who filed a civil lawsuit accusing McMahon of sexual assault and sex trafficking. McMahon has strongly denied Grant’s allegations.
The SEC’s order found that because McMahon did not disclose the agreements to WWE, the company had not evaluated the implications of the disclosure or properly accounting for these transactions in its financial statements. According to the SEC, because the payments required by McMahon’s 2019 and 2022 agreements were not recorded, WWE overstated its 2018 net income by approximately 8% and its 2021 net income by approximately 1.7%. Furthermore, these payments should have been disclosed as related party transactions, according to the order. The order further revealed that McMahon had signed management representation letters provided to WWE’s auditor that did not disclose the existence of either settlement agreement. After learning of the settlement agreements, WWE issued a restated financial statement in August 2022.
“Company executives cannot enter into material agreements on behalf of the company they serve and withhold that information from the company’s control functions and auditor,” said Thomas P. Smith Jr., associate regional director at the SEC’s New York regional office. York, in a January 2014. 10 statement.
