On November 4, 2009, the SEC announced that it filed a settled civil action against Merge Healthcare Incorporated, Richard Linden, and Scott Veech, charging them "with an accounting fraud that occurred from 2002 through 2005." According to the SEC: "Merge, Linden, and Veech settled the charges without admitting or denying the allegations of the SEC's complaint. Under the settlement, Linden and Veech are permanently enjoined from committing future violations of the antifraud provisions of the federal securities laws and are barred from serving as an officer and director of a public company for five years. Additionally, Linden will pay $382,193 in disgorgement, $117,807 in prejudgment interest, and a penalty of $90,000, and Veech will pay $180,000 in disgorgement, $50,000 in prejudgment interest, and a $50,000 penalty. Veech also consented to the entry of an administrative order which suspends him from appearing or practicing before the Commission as an accountant, with a right to reapply after three years. Merge is permanently enjoined from future violations of the internal controls, books and records, and reporting provisions of the federal securities laws."

On November 4, 2009, the SEC announced that it charged Merge Healthcare Incorporated ("Merge"), its former CEO Richard Linden ("Linden"), and its former CFO Scott Veech ("Veech") for an accounting fraud that ultimately caused the company's stock price to drop by two-thirds during a seven-month period. According to the SEC's complaint filed in federal court in Milwaukee, Linden and Veech engineered a process where Merge improperly recognized revenue from sales that had not been fully completed. The SEC further alleged that Linden, with Veech's knowledge, interfered with the audit confirmation process by instructing Merge sales personnel to tell some of Merge's customers not to disclose side agreements to Merge's outside auditor. As a result of the fraudulent accounting practices, Merge overstated its net revenue by approximately 26 percent and its net income by approximately 230 percent in annual and quarterly reports from its first quarter of 2002 through its second quarter of 2005. Without admitting or denying the allegations, Merge, Linden, and Veech each agreed to settle the SEC's charges. Under the settlement, Linden and Veech are required to pay monetary penalties, permanently enjoined from committing future violations of the antifraud provisions of the federal securities laws, and barred from serving as an officer and director of a public company for five years. Additionally, Veech consented to the entry of an administrative order that suspends him from appearing or practicing before the SEC as an accountant, with a right to reapply after three years. Merge is permanently enjoined from future violations of the internal controls, books and records, and reporting provisions of the federal securities laws.

In the Complaint, the SEC stated: "This case concerns a fraudulent revenue recognition scheme from approximately early 2002 through late 2005 involving Merge Technologies, Inc., now known as Merge Healthcare Incorporated ('Merge' or the 'Company'). Merge, a company with its primary office located in Milwaukee, Wisconsin, develops medical imaging software, hardware, and services. Merge failed to comply with Generally Accepted Accounting Principles ('GAAP') by, among other things, prematurely recognizing revenue on transactions in which Merge promised customers that a software feature would be delivered in the future.... These fraudulent accounting practices caused Merge to overstate its net revenue by approximately 26% and overstate its net income by approximately 230% from its first quarter of 2002 through its second quarter of 2005."

On November 17, 2009, Federal District Judge Charles N. Clevert, Jr. entered final judgment against Merge Healthcare Incorporated pursuant to the consent of Merge Healthcare Incorporated.