The former chief financial officer (CFO) of Minnetonka-based Digi International, Inc., has reached a tentative deal with the U.S. Securities and Exchange Commission (SEC) to settle allegations that he broke federal securities laws, according to a letter sent this week from SEC attorney Daniel Wadley to U.S. District Court Judge Paul Magnuson.
Lawyers for both Subramanian Krishnan and the SEC reached a “tentative settlement,” which must be approved by the SEC in Washington, D.C.—a process that can take several months, Wadley wrote. “We will work diligently to advance the process and keep the court apprised of its status,” he added.
Wadley told Twin Cities Business on Tuesday that “nothing is final,” and all aspects of the settlement are confidential at this point. If the deal is approved by the SEC, it will then go before Magnuson for approval.
The SEC sued Krishnan in September, alleging that he diverted Digi funds for personal entertainment expenses. The company’s rules required Krishnan’s own expense reports to be approved by the CEO, but he evaded that rule by having the company’s Hong Kong office submit his expenses as though they belonged to other employees, the SEC said.
Krishnan’s actions resulted in the company filing inaccurate financial reports with the SEC from March 2005 through May 2010, the SEC said. Krishnan previously agreed to an injunction barring him from future violations of federal securities laws, but he did not admit or deny the SEC’s allegations at that time.
Kevin Coan, an attorney for Krishnan, was not immediately available for comment Tuesday afternoon.
After resigning from Digi, Krishnan served a stint as CFO of the Minneapolis-based National Marrow Donor Program, although the organization wrote in a Tuesday e-mail to Twin Cities Business that Krishnan’s employment there concluded in early January, and he had been on “administrative leave” since early October. The organization declined to provide additional information.
Digi International—which makes computer networking devices such as servers and modem adapters—announced in 2010 that Krishnan had resigned amid an investigation into violations of the company’s gifts, travel, and entertainment policy. The company said later that year that it would not be charged or fined in connection with the investigation.
Digi is among Minnesota’s 60 largest public companies based on revenue, which totaled $190.6 million in its most recently completed fiscal year.