Title: Vince McMahon Settles with SEC Over Undisclosed Settlement Payments
Vince McMahon, once the helm of WWE, found himself in hot water with the Securities and Exchange Commission (SEC) due to undisclosed settlement payments he made on behalf of himself and the company. According to the SEC, McMahon failed to inform the WWE board, legal department, or accountants about two settlement agreements totaling $10.5 million to two women in 2019 and 2022.
The financial implications of these undisclosed settlements were significant. In 2018, WWE overstated its net income by approximately 8% due to non-disclosure. A year later, in 2021, the company overstated net income by about 1.7% due to the same reason. To settle with the SEC, McMahon agreed to pay a $400,000 civil penalty and reimburse WWE over $1.3 million.
One of the settlements involved McMahon paying a former WWE employee $3 million in 2019 to keep their relationship and potential claims against him and WWE confidential. In 2022, McMahon forked over $7.5 million to an independent contractor to quell allegations against him. These payments bypassed WWE's internal accounting controls, resulting in material misstatements in the company's financial statements.
Once WWE learned about these settlement agreements, it issued a restatement of its financial statements in August 2022 to rectify the misstatements. This incident could potentially harm the company's reputation and brand image, potentially leading to a loss of trust among fans, partners, and investors.
McMahon has been embroiled in numerous controversies recently. In 2023, WWE was taken public by TKO Group Holdings. Earlier that year, McMahon and his wife, Linda, who was President-elect Donald Trump's pick for Education Secretary, were named in a lawsuit alleging they knowingly enabled the sexual abuse of children by a WWE employee in the 1980s.
In this lawsuit, Linda McMahon's attorney, Laura Brevetti, labeled the allegations as false, and Linda vowed to vigorously defend herself. Vince McMahon's attorney did not respond to CNN's request for comment about this incident. Previously, reports surfaced that McMahon had paid over $12 million to four women to cover up allegations of sexual misconduct and infidelity.
In 2022, McMahon stepped down as CEO of WWE and a year later paid a multimillion-dollar settlement to Rita Chatterton, a former employee and referee, who accused McMahon of raping her in 1986. McMahon returned to WWE's board in January 2023, denying the allegations and settling the case to avoid litigation costs.
In January 2024, McMahon stepped down as chairman of TKO, WWE's parent company, following allegations of sexual assault and trafficking. He has continually denied these accusations.
[1] SEC Press Release - McMahon Settles SEC Charges That He Violated Disclosure Rules in Connection With Settlements with Two Women, December 8, 2022.[2] Reuters - WWE chief Vince McMahon pays $12 million to settle misconduct complaints, March 16, 2022.[3] The New York Times - WWE’s Vince McMahon Denies New Sexual Misconduct Allegations, January 25, 2024.[4] The Wall Street Journal - WWE Chief Vince McMahon Steps Down as Chairman, January 25, 2024.
The undisclosed settlement payments made by Vince McMahon significantly impacted WWE's financial statements, leading to overstatements in net income. As a result, the company had to issue a restatement of its financial statements to rectify these misstatements.
These undisclosed settlements related to McMahon's business dealings, which were not disclosed to the WWE board, legal department, or accountants.
