The Securities and Exchange Commission today announced settled charges against Acreage Holdings, Inc. for violating the books and records provision of the federal securities laws when it created false records regarding a transfer of approximately $4 million that was temporarily moved into the company’s bank account a few days before the end of Acreage’s 2019 fiscal year.
According to the SEC’s order, Acreage caused an affiliated entity to transfer approximately $4.2 million into Acreage’s bank account on December 26, 2019, with the express understanding that Acreage would return the full amount at the beginning of the new year, which it did on January 3, 2020. Acreage then allegedly created journal entries and other records that mischaracterized the round-trip transfer, first as a repayment of debt owed by the affiliate and later as a short-term loan to Acreage. The SEC’s order further finds that after certain employees’ concerns about the round-trip nature of the transaction were escalated to a member of Acreage’s board of directors, Acreage recorded an additional journal entry that effectively reversed the transaction.
The SEC’s order also finds that during the audit of Acreage’s fiscal year 2019 financial statements, Acreage created and provided written documents to the accounting firm conducting the audit that misrepresented and omitted material facts about the round-trip cash transfer. As a result, the SEC’s order finds that Acreage violated Section 13(b)(2)(A) of the Securities Exchange Act of 1934 by failing to make and keep books, records, and accounts that accurately and fairly reflected the round-trip cash transfer.
Without admitting or denying the findings in the SEC’s order, Acreage agreed to cease and desist from committing or causing violations or future violations of Section 13(b)(2)(A), and to pay a civil penalty of $225,000.
