![]() Based off historical subscriber attrition rates, Gaia concluded that the transition caused it to lose subscribers who may have otherwise kept their subscriptions. The company experienced a number of technical issues that caused confusion among its employees regarding how to tally the number of paying subscribers. Gaia's transition to the new billing system turned out to be anything but peaceful. The next day, Gaia's stock price dropped approximately 15 percent. On the same call, the company announced that it had missed analysts' expectations for, among other things, subscriber growth for the fourth quarter and year-end of 2018, and the CFO cautioned that the company "expect to report around 560,000 paying subscribers for Q1 ," a quarterly growth of about 10,000 subscribers. explained that the switch would have a "one-time impact" in the first quarter of 2019. niche categories and begin accessing streaming content over the internet." In an earnings call on March 4, 2019, the company announced its plans to switch its billing platform from its legacy home-grown billing software to a third-party system. In the third quarter of 2018, Gaia surpassed 500,000 paid subscribers and stated in its 2018 Form 10-K that the "subscriber base can be significantly expanded as more and more people enter. The settlement further provides important insight into the scope of the Dodd-Frank Wall Street Reform and Consumer Protection Act's anti-retaliation provisions, specifically Exchange Act Section 21(F)(h), which prohibits an employer from retaliating against whistleblowers, and Rule 21F-17 thereunder, which was intended to prevent employers taking any action that impedes a whistleblower from communicating with the SEC about a possible securities law violation.Īs a subscription-based company, the number of paying subscribers Gaia (formerly Gaiam) is a key metric that its management and analysts track closely. ![]() attempting, through severance agreements, to prevent whistleblowers from collecting a reward from the SEC in violation of Exchange Act Rule 21F-17Īs discussed below, this settlement reinforces that a company's words and actions, both publicly and internally, are of paramount importance to the SEC, and it makes clear that the agency will take action where a company does not comply with federal securities laws, including those established to protect whistleblowers.retaliating against a whistleblower who brought the issue to management's - and ultimately the SEC's Division of Enforcement's - attention.overstating the amount of paying subscribers it had.Securities and Exchange Commission (SEC) in a recent settlement involving yoga-streaming company, Gaia Inc. Public companies should be mindful not to interfere with or retaliate against whistleblowers, and stretching is best reserved for the yoga mat, not the numbers in a company's public disclosures. Maddie assists companies on a wide range of legal and compliance issues involving financial and lending institutions, real estate disputes, healthcare and more. The first blog in this series comes from Houston Associate Maddie Tansey, who focuses her practice on a variety of complex litigation matters, including internal and regulatory investigations and enforcement actions. Holland & Knight's SECond Opinions Blog is excited to debut a Summer Series featuring posts written and researched by the associates in the Securities Enforcement Defense Team.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |