Zenefits and Former CEO to Pay Heavy Fines to Settle SEC Probe
Zenefits Insurance Services and co-founder and former CEO Parker Conrad will pay a combined $980,000 in fines after a settlement with the U.S. Securities and Exchange Commission (SEC), the latter said in October 2017. The SEC alleged Zenefits had misled investors when raising capital through private offerings, by making false statements about their compliance with state insurance laws, specifically whether its business and employees were licensed to sell insurance.
The settlements follow separate deals with several state insurance regulators and conclude a nearly two-year legal cleanup that began in November 2015. The company in October 2017 announced a fundamental change in its strategy and business model.
The company agreed to pay $450,000 to the SEC, less than 0.1% of the over half a billion dollars it has raised from professional investors. Conrad is to pay nearly $534,000, including a $160,000 penalty and $350,000 representing the disgorgement of his gains. Zenefits had already agreed to pay over $11 million in penalties to state insurance regulators and to reduce its valuation to $2 billion from $4.5 billion.
Zenefits and its new leadership team should now be able to carry on and implement the new strategy.