Defendant Name:
JDA Software Group, Inc.
Defendant Type:
Public Company
Document Reference:
2014-216
Document Details
Legal Case Name
In the Matter of JDA Software Group, Inc.
Document Name
SEC Charges Arizona-Based Software Company for Inadequate Internal Accounting Controls Over Its Financial Reporting
Document Date
25-Sep-2014
Document Format
Administrative Proceeding
Allegation Type
Issuer Reporting and Disclosure
Document Summary
On September 25, 2014, the SEC announced that it sanctioned Scottsdale, Arizona-based software company JDA Software Group, Inc. ("JDA") for having inadequate internal accounting controls over its financial reporting, which resulted in misstated revenues in public filings. According to the SEC's order instituting a settled administrative proceeding, JDA failed to properly recognize and report revenue from certain software license agreements it sold to customers because its internal accounting controls failed to consider information needed for determining a critical component of revenue recognition for software companies. If companies are unable to demonstrate this component--known as vendor specific objective evidence of fair value ("VSOE")--when determining the fair value of certain services related to a software license agreement, then they cannot immediately recognize the entire revenue from that agreement. With proper internal controls that appropriately considered VSOE, JDA would have recognized revenue from certain sales ratably over the term of a services agreement. The SEC's order finds that JDA violated the reporting, books and records, and internal controls provisions of the federal securities laws. In agreeing to settle the charges without admitting or denying the SEC's findings, JDA consented to the SEC's order imposing a $750,000 penalty and requiring the company to cease and desist from committing or causing any violations or any future violations of federal securities laws.
Disgorgement & Penalty Information
Resolutions
Cease and Desist Order