SEC Charges Telecommunications Company Pareteum Corporation with Accounting and Disclosure Fraud

ADMINISTRATIVE PROCEEDING
File No. 3-20522

September 2, 2021 - The Securities and Exchange Commission today charged New York-based telecommunications company Pareteum Corporation with fraud and other violations stemming from multiple company filings containing inaccurate financial statements and disclosures.

According to the SEC's order, from January 2018 through June 2019, Pareteum's public filings materially overstated its revenue by, among other things, recognizing revenue based on non-binding purchase orders prior to the shipment of product. Further, the order finds that when Pareteum's auditor asked about the resulting large increase in its accounts receivable, Pareteum manipulated the third-party confirmation process, directing false information to its auditor. On December 14, 2020, Pareteum restated its financial results for 2018 and the first half of 2019, reducing full year 2018 revenue from $32.4 million to $20.3 million, and reducing its revenue for the first half of 2019 from $57.2 million to $30 million.

Without admitting or denying the SEC's findings, Pareteum consented to the SEC order finding that Pareteum violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, as well as various reporting, books and records, and internal accounting controls provisions of the Exchange Act and rules thereunder. The order requires Pareteum to cease and desist from further violations of the charged provisions and to pay a $500,000 penalty. The order acknowledges that the SEC considered Pareteum's cooperation in the investigation and its remedial acts.

The SEC's continuing investigation is being conducted by Megan Ryan and Daniel Berman of the Philadelphia Regional Office and is supervised by Julia Green and Scott Thompson.