ADT Fined By SEC For Violating Earnings Disclosure Requirements

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( - The Securities and Exchange Commission or SEC has ordered ADT Inc. ( ADT ), a residential and business security company, to pay a fine of $100,000 for failure to report financial measures under Generally Accepted Accounting Principles or GAAP while announcing its earnings results.

The SEC said in an enforcement announcement that ADT "did not afford equal or greater prominence" to comparable GAAP financial measures in two of its earnings releases containing non-GAAP or non-standard financial measures.

The two earnings releases relate to ADT's fourth quarter and fiscal year 2017 earnings release dated and furnished to the SEC on March 15, 2018, and ADT's first-quarter 2018 earnings release dated and furnished to the SEC on May 9, 2018.

The SEC noted that in both these earnings releases, ADT provided non-GAAP financial measures such as adjusted EBITDA, adjusted net income, and free cash flow before special items, without giving equal or greater prominence to the comparable GAAP financial measures.

" issuer, when including a non-GAAP financial measure in a filing with the Commission, must include a presentation, with equal or greater prominence, of the most directly comparable financial measure or measures calculated and presented in accordance with GAAP," the SEC noted.

According to the SEC, in the headline of the fiscal 2017 earnings release, ADT presented its adjusted EBITDA for fiscal year 2017 and stated that the adjusted EBITDA was up 8 percent year-over-year, without mentioning its GAAP net income or loss in the headline.

The company also reported its earnings results similarly for the first quarter of 2018.

The SEC has ordered ADT to cease and desist from committing or causing any violations and any future violations of the Securities Exchange Act of 1934 and also ordered the company to pay a civil money penalty of $100,000 to the agency within 20 days of the entry of the order.

ADT was taken private by Apollo Global Management LLC (APO) in 2014, but returned to the public markets in January 2018.

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