On September 28, 2020, Interface, Inc. (NASDAQ: TILE) announced the conclusion of the long-awaited investigation by the U.S. Securities and Exchange Commission into Interface’s historical quarterly earnings per share calculations and rounding practices. Interface agreed to pay a $5 million fine to resolve the matter, and was ordered to cease-and-desist from violating the federal securities laws. On this news, shares of Interface common stock fell precipitously.
According to the Wall Street Journal, the SEC had charged Interface for reporting earnings that did not comply with the Generally Accepted Accounting Principles for multiple quarters in 2015 and2016. Interface allegedly made unsupported, manual accounting adjustments, often when internal forecasts indicated the Company would fall short of Wall Street estimates, the SEC found. Per the SEC, Interface would then report earnings that met or exceeded those consensus estimates. In addition to the Company’s $5 million fine, two of Interface’s former executives agreed to pay penalties of $45,000 and $70,000.