Surgalign (Nasdaq:SRGA) announced that it reached a settlement with the U.S. Securities and Exchange Commission (SEC).
The settlement concludes and resolves in its entirety an SEC investigation related to activities including pulling sales forward from future quarters to address projected quarterly revenue shortfalls. Activities evaluated in the investigation occurred between 2015 and 2019, back when Surgalign operated under the RTI Surgical name.
Deerfield, Illinois–based Surgalign agreed to pay a civil penalty of $2 million — recorded in full during the fourth quarter of 2021 — under the terms of the settlement.
According to a news release, as part of the settlement, Surgalign also agreed to refrain from future violations of specified provisions of federal securities laws and rules. The company is also expected to receive $600,000 from former executives related to recouped compensation.
Surgalign said that the SEC acknowledged the company’s “substantial cooperation” with the commission’s staff throughout the investigation. That included disclosing information about conduct that the staff hadn’t yet uncovered in its own investigation, conducting an internal investigation regarding such conduct and providing the SEC with regular and detailed updates on the internal investigation, as well as key documents identified throughout the internal investigation.
“This investigation and the settlement reached stems from the activities of RTI and former senior management, not our current team. Reaching this settlement with the SEC will allow us to move forward without this uncertainty and is one more issue resolved in our effort to transform the company since we divested the RTI OEM business roughly two years ago,” Surgalign CFO David Lyle said in the news release. “We believe we are now at the tail end of our transformation and are excited about the prospects of returning to growth in 2023 through new spine product offerings and the ramp of our HOLO Portal Surgical Guidance System coupled with the expansion of our AI platform.”