Ex-CFO Pays $60K, Agrees To 5-Yr. Ban To Settle Charges
The U.S. Securities and Exchange Commission (SEC) recently announced that Subramanian Krishnan, the former chief financial officer (CFO) of Minnetonka-based Digi International, Inc., has agreed to pay $60,000 to settle allegations that he broke federal securities laws.
The agreement also prohibits Krishnan from serving as an officer or director of a public company for five years following the filing of the SEC’s 2012 lawsuit.
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 allegedly resulted in Digi filing inaccurate financial reports with the SEC. The agency also accused him of failing to enforce Digi’s internal controls.
In February, an SEC attorney wrote in a letter to a judge that Krishnan and the agency had reached a “tentative settlement,” although the exact details of the deal were not disclosed at the time.
Krishnan neither admitted to nor denied the allegations, according to recently filed court documents in which he approved the settlement. The deal allows him to pay the $60,000 fine in installments, with $15,000 due within 10 days and the rest to be paid over the course of two years, according to court documents.
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.
After resigning from Digi, Krishnan served a stint as CFO of the Minneapolis-based National Marrow Donor Program, although the organization previously told Twin Cities Business that his employment there concluded in early January, and he had been on “administrative leave” since early October.