Digital video subscription service Gaia will pay a $2 million fine to the Securities and Exchange Commission (SEC) for allegedly overstating its paid subscribers and retaliating against an internal whistleblower.
The details: In April 2019, Colorado-based Gaia reported in an SEC filing and in an earnings call it met its first-quarter objective by having 562,000 paying subscribers but neglected to mention 15,000 subscriptions were free trials and another 4,500 represented subscribers whose credit card payments had been declined, according to the SEC.
Gaia allegedly terminated an employee who blew the whistle on the company’s overstatement of its total paid subscribers, both internally to company executives and to the SEC. Gaia told the employee via email the complaint was “’unfounded’” and that the whistleblower was being fired “’for cause,’” as the investigation into the allegation “’required a significant expenditure of company resources to fully investigate,’” according to the SEC’s administrative proceeding published Tuesday.
The SEC does not disclose information about whistleblowers, other than anonymized award amounts.
Gaia also entered into severance agreements with 23 employees stipulating they consented to “forgo any monetary recovery in connection with providing information to the commission,” the SEC found. Such a provision violates the whistleblower protections contained in the Dodd-Frank Act, which forbids companies from impeding whistleblowers’ ability to...
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