Westwood One Inc., without admitting guilt, settled charges with the Securities and Exchange Commission that it fraudulently misstated financial statements in 1987 and 1988.
The SEC alleged that Westwood One, its then-president William J. Battison and its then-chief accounting officer Gary J. Yusko used improper and fraudulent accounting practices that, in part, made quarterly earnings in 1987 and 1988 look significantly better than they were.
The settlement called for the execs and the Culver City-based parent of the Mutual Broadcasting System and the NBC Radio Network to agree to cease and desist from future violations.
“We settled without admitting or denying guilt to bring this matter to a closure,” said Laurie Peters, a Westwood One spokeswoman. “It’s something we wanted to put to rest.”
In a detailed legal brief, the SEC said the alleged violations led Westwood One to overstate its fiscal 1987 pretax income by about 18% or $ 2.8 million and its fiscal 1988 pretax income by 49% or $ 1.5 million. The agency also said the company improperly valued barter radio ads, recognized revenue in the wrong quarter and did not disclose changes in station compensation accounting policy, among other wrongdoings.
But the agency sought the cease and desist order because “there are not that many alternatives,” said Gary Sundick, associate director for the SEC’s division of enforcement.
The alleged violations occurred before the agency got the authority to charge violators with criminal wrongdoing or impose fines.