(Image source from: The Indian Express)

An Indian-origin executive has settled charges with the United States Securities and Exchange Commission for overstating the company's subscriber base, while another Indian-origin person was charged for making similar misrepresentations.

The 42-year-old Hari Ravichandran, a former chief executive of web hosting company Endurance International Group Holdings and former Chief Financial Officer (CFO) Waruna Ellawala knowingly rendered inflated subscriber figures for the Massachusetts-based online marketing company, the Securities and Exchange Commission (SEC) said.

A resident of Boston, Ravichandran, had founded Endurance in 1997 and served as the company's Chief Executive Officer and as a member of the Board of Directors.

The SEC also filed a complaint in the U.S. District Court in Massachusetts alleging that former Constant Contact CFO the 51-year-old Harpreet Grewal, hid its slowing customer growth from investors and inflated its publicly reported subscriber numbers. In 2016 the Constant Contact became a subsidiary of Endurance after it was acquired by it.

Constant Contact sold email marketing and other online marketing tools to customers primarily through subscription arrangements.

SEC said Grewal defrauded Constant Contact's investors concerning the number of paying customers for the company's products and services, which was a key metric disclosed by Constant Contact to its investors.

In June Endurance and Constant Contact, the SEC filed an accomplished enforcement action, in which Endurance agreed to pay a USD 8 million penalty.

Ravichandran and Ellawala, in the latest action, agreed to settle the charges without acknowledging or contradicting them and pay USD 1.38 million and USD 34,000 respectively in penalties, disgorgement, and interest.

"For companies who provide subscription-based services, size and growth of subscriber base can be critical metrics," said Paul Levenson, Director of the SEC's Boston Regional Office. "Investors depend on the integrity of management in reporting such figures, which commonly fall outside the scope of formal audits. Holding senior executives accountable for failures of oversight as well as outright manipulation of such metrics is vital to protecting our markets."

They likewise agreed to end and abstain from further violations of several reporting, antifraud, records and books, and internal controls provisions of the federal securities laws.

By Sowmya Sangam