NEW YORK, Nov. 9, 2016 /PRNewswire/ — (NASDAQ: MDCA) – MDC Partners Inc. (“MDC Partners” or the “Company”) announced today that it has reached an agreement in principle to resolve the ongoing investigation by the Securities and Exchange Commission (the “SEC”). The SEC Commissioners must still approve the proposed framework agreement, which was reached with the Philadelphia Regional Office of the SEC, and therefore the terms are not final.
The Company first announced the SEC investigation on April 27, 2015, as well as subsequent actions taken as part of an internal investigation, including the resignation by Miles Nadal, the Company’s former Chairman and Chief Executive Officer. As a result of the investigation, Mr. Nadal agreed to fully repay the Company for improper expenses incurred in an aggregate amount of $11,285,000, together with an amount equal to $10,581,605 in respect of prior cash bonus awards.
Under the proposed framework agreement, the Company is not admitting liability. The Company would agree to entry of a cease and desist order that it not violate Section 17(a)(2) of the Securities Act of 1933 and Sections 13(a), 13(b) and 14(a) of the Securities Exchange Act of 1934 and related rules requiring that periodic filings be accurate (including Regulation G), that accurate books and records and a system of internal accounting controls be maintained and that solicitations of proxies comply with the securities laws, which the SEC Staff has concluded MDC unintentionally violated. In addition, the Company would pay a $1.5 million civil penalty to the SEC to resolve all potential claims by the SEC against the Company relating to these matters. There will be no restatement of any of the Company’s previously-filed financial statements.
Scott L. Kauffman, the Company’s Chairman and Chief Executive Officer, stated that “We are extremely pleased that this matter is on its way towards final resolution for the Company and our stakeholders.” Mr. Kauffman added, “We greatly appreciate that the Philadelphia Regional Office of the SEC recognized our high level of cooperation and the extensive internal investigation conducted by the Company’s Special Committee and outside counsel, as well as the self-initiated remedial measures implemented in connection with new policies and procedures.”
MDC Partners understands that the SEC will continue its investigation of certain persons who previously served as executive officers of the Company.
About MDC Partners Inc.
MDC Partners is one of the fastest-growing and most influential marketing and communications networks in the world. Its 50+ advertising, public relations, media, branding, digital, social and event marketing agencies are responsible for some of the most memorable and engaging campaigns for the world’s most respected brands. As “The Place Where Great Talent Lives,” MDC Partners is known for its unique partnership model, empowering the most entrepreneurial and innovative talent to drive competitive advantage and business growth for clients. By leveraging technology, data analytics, insights, and strategic consulting solutions, MDC Partners drives measurable results and optimizes return on marketing investment for over 1,700 clients worldwide.