NEWS21 October 2009

InfoGroup agrees tentative settlement over SEC probe

Legal North America

US— Research and database marketing firm InfoGroup has reached a tentative settlement agreement with a regional office of the Securities and Exchange Commission (SEC) after a two-year investigation into the company’s spending and accounting practices.

InfoGroup says it will not admit or deny liability as part of the settlement but will enter into a ‘cease and desist’ order pledging to maintain internal accounting controls and keep accurate books and records. If the settlement is approved intact by SEC commissioners the company will not be required to pay a financial penalty.

CEO Bill Fairfield said: “We are pleased that this matter is on its way to resolution and that the Denver Regional Office of the SEC appears to have recognised the high level of our cooperation and the numerous remedial measures which our new board of directors and management have put in place.”

The SEC investigation began in November 2007 in response to a shareholder lawsuit which alleged the company had misspent millions on corporate expenses and related-party transactions – chiefly payments made by InfoGroup to companies owned by its chairman and CEO at the time, Vin Gupta.

InfoGroup’s own internal probe found that “various related-party transactions, expense reimbursement and corporate expenditures were excessive”, after which the company’s board instituted new policies relating to business expenses and the size of transactions corporate officers could enter in to.

The shareholder lawsuit was settled last year after Gupta agreed to pay back $9m to the company and resign from his executive roles, though he remains a director and significant shareholder in the business.