Marrone Bio Innovations, Inc., a provider of bio-based pest management and plant health products for the agriculture, turf and ornamental and water treatment markets, announced the company entered into a settlement agreement with the United States Securities and Exchange Commission (SEC) fully resolving a previously disclosed investigation, which was principally related to the accounting and other matters that were initially identified by the company in September 2014 and that led to the financial restatement completed by the company on Nov. 10, 2015. 

In agreeing to the settlement, the Marrone Bio neither admited nor denied the SEC’s allegations that the company violated certain provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC issued a news release explaining the details of the inquiry and penalty against the company from its view.  

Under the terms of the settlement agreement, the company will pay a $1.75 million civil penalty and consents to an injunction against future violations of such laws. The company noted that the individual alleged by the SEC to have engaged in the conduct that is the focus of the SEC’s complaint against the company resigned in August 2014.

Pamela Marrone, Ph.D., Marrone Bio chief executive officer, said,“We have determined that resolving this matter serves the best interests of the company and its stockholders. With this behind us, we can focus on our business going forward.”

The SEC alleges that former chief operating officer Hector M. Absi Jr. concealed from Marrone Bio’s finance personnel and independent auditor various sales concessions offered to customers, leading the Davis, Calif.-based company to improperly recognize revenue on sales.  Absi allegedly profited from the fraud. He resigned shortly before the alleged fraud came to light, and the company’s stock price plunged more than 44 percent. 

In a parallel action announced on Feb. 17, the U.S Attorney’s Office for the Eastern District of California reported filing criminal charges against Absi.

“We allege that Marrone Bio misled investors to make itself look like a fast-growing new public company,” said Jina L. Choi, director of the SEC’s San Francisco regional office. “Public companies and their officers should know better than taking shortcuts to recognize revenue in the near term is harmful to investors and can be damaging to a company’s long-term success.”