The Securities and Exchange Commission has charged the former CFO of a Colorado-based environmental solutions company with accounting and books and records violations.
The SEC's complaint, filed in federal court in the District of Columbia, alleges that Mark McKinnies approved Advanced Emissions Solutions, Inc.'s filing of false and misleading financial statements from at least 2011 through 2013 and oversaw the inaccurate recording of transactions in the company's books and records. The SEC alleges that Advanced Emissions:
failed to record a significant loss contingency in connection with an adverse arbitration ruling against the company;
prematurely recognized revenues on long-term contracts;
failed to properly account for warranty accruals;
improperly consolidated a joint venture in Advanced Emissions' balance sheet accounts; and
overstated revenues and gross profits from one of its subsidiaries.
In a restatement filed in 2016, the company corrected for these and other errors.
McKinnies agreed, without admitting or denying the allegations in the SEC's complaint, to be permanently enjoined from violating Sections 17(a)(2) and (3) of the Securities Act of 1933 and Rule 13b2-1 under the Securities Exchange Act of 1934, to be barred from acting as an officer or director of a public company for five years, and to pay disgorgement, prejudgment interest and a penalty totaling $238,692. The settlement is subject to court approval. McKinnies also has agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC's order would permit McKinnies to apply for reinstatement after five years.
Advanced Emissions separately consented to the entry of an SEC order instituting cease-and-desist proceedings. According to the SEC's order, from at least 2011 through 2013, Advanced Emissions issued false and misleading financial statements. The company's internal control over financial reporting also was deficient. The SEC's order finds that Advanced Emissions violated Sections 17(a)(2) and (3) of the Securities Act, Sections 13(a) and 13(b)(2)(A) and (B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. Advanced Emissions agreed to entry of a cease-and-desist order and to pay a $500,000 penalty. The SEC considered Advanced Emission's cooperation in determining to accept the offer.