The SEC announced Friday that it settled charges against Vince McMahon, former CEO of WWE, that he made personal payments that “circumvented WWE’s system of internal accounting controls” and caused “material misstatements” in the company’s 2018 and 2021 financial statements.
McMahon consented to the entry of the SEC’s order finding that he violated the Securities Exchange Act by “knowingly circumventing WWE’s internal accounting controls and that he directly or indirectly made or caused to be made false or misleading statements to WWE’s auditor,” the agency said. “Without admitting or denying the SEC’s findings,” McMahon agreed to cease-and-desist from violating those provisions, pay a $400,000 civil penalty and reimburse WWE $1.33 million pursuant to Section 304(a) of the Sarbanes-Oxley Act.
According to the SEC’s order, McMahon entered into one settlement agreement that obligated him to pay a former WWE employee $3 million in exchange for the ex-employee’s agreement to not disclose her relationship with McMahon and her release of potential claims against WWE and McMahon. A second agreement obligated McMahon to pay a former WWE independent contractor $7.5 million in exchange for the independent contractor’s agreement to not disclose her allegations against McMahon and her release of potential claims against WWE and McMahon.
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In a statement on X Friday, McMahon wrote, “The case is closed. Today ends nearly three years of investigation by different governmental agencies. There has been a great deal of speculation about what exactly the government was investigating and what the outcome would be. As today’s resolution shows, much of that speculation was misguided and misleading. In the end, there was never anything more to this than minor accounting errors with regard to some personal payments that I made several years ago while I was CEO of WWE. I’m thrilled that I can now put all this behind me.”
McMahon had stepped down as WWE’s CEO in June 2022 amid an investigation by the company’s board into the alleged hush-money payments to women who accused him of sexual misconduct. In March 2023, McMahon reimbursed WWE $17.4 million for costs the company incurred in connection with or “arising from” the investigation conducted by the board’s special committee. As CEO of WWE, McMahon had made personal payments totaling $19.6 million that should have been recorded as expenses, the company disclosed. Of that, $14.6 million was related to the alleged misconduct dating back to 2006, according to the company, while the additional $5 million went to Donald Trump’s charity, the Wall Street Journal reported.
McMahon returned to WWE in January 2023 as executive chairman to lead efforts to sell the company, which later that year merged with UFC to form TKO Group as a separately traded public company in a deal engineered by Endeavor.
McMahon in January 2024 resigned from TKO’s board in the wake of the allegations made by former WWE employee Janel Grant, who filed a civil lawsuit accusing McMahon of sexual assault and sex trafficking. McMahon has strongly denied Grant’s allegations.
Ann Callis, attorney for Grant, said in a statement following the announcement of the SEC’s settlement with McMahon: “During his time leading WWE, Vince McMahon acted as if rules did not apply to him, and now we have confirmation that he repeatedly broke the law to cover up his horrifying behavior, including human trafficking. The SEC’s charges prove that the NDA Vince McMahon coerced Ms. Grant into signing violates the law, and therefore her case must be heard in court.” Callis added that while Justice Department prosecutors for the Southern District of New York continue their criminal investigation, “we look forward to bringing forward new evidence in our civil case about the sexual exploitation Ms. Grant endured at WWE by Vince McMahon and [former head of talent relations for WWE] John Laurinaitis.”
The SEC’s order found that, because McMahon failed to disclose the agreements to WWE, the company did not evaluate the disclosure implications or the appropriate accounting for these transactions in its financial statements. According to the SEC, because the payments required by McMahon’s 2019 and 2022 agreements were not recorded, WWE overstated its 2018 net income by approximately 8% and its 2021 net income by approximately 1.7%. In addition, according to the order, these payments should have been disclosed as related party transactions. The order further found that McMahon signed management representation letters that were provided to WWE’s auditor that did not disclose the existence of either settlement agreement. After learning of the settlement agreements, WWE issued a restatement of its financial statements in August 2022.
“Company executives cannot enter into material agreements on behalf of the company they serve and withhold that information from the company’s control functions and auditor,” Thomas P. Smith Jr., associate regional director in the SEC’s New York regional office, said in a Jan. 10 statement.