Do you hear that? It's the Man, and he's coming. SouthPeak Interactive made a filling with the United States Securities and Exchange Commission on November 19th which revealed that the publisher's chairman Terry Phillips and CEO Melanie Mroz have both received Wells Notices (a notice sent when the staff of the SEC encourages enforcement action against a company).
The action comes as a result of an investigation following an amended quarterly report by SouthPeak, after it was determined by management that there were problems with the books. The SEC alleges that that the parties violated accounting laws and failed to maintain internal safeguards within the company to ensure proper accounting. In addition, SEC staff recommends that the commission seek civil damages from Phillips for "aiding and abetting" violations.
Phillips is no stranger to SEC enforcement. Back in 2000, he and his company Capitol Distributing LLC were accused by the commission of aiding and abetting Take-Two Interactive in, "violations of antifraud, reporting and recordkeeping provisions." As part of a settlement, Phillips was slapped with a cease and desist order and made to pay a civil penalty of $50,000.
Neither is this the beginning of SouthPeak's legal wrangling with the federal government. At present, the SEC is pursuing five different lawsuits (all in varying stages of litigation) against SouthPeak subsidiaries including Gamecock.