CPA ordered to pay disgorgement and civil penalty for insider trading

The US Securities and Exchange Commission has entered an order in the matter of Scott A. Woodward, a Texas certified public accountant who provided contract accounting services to PFSWeb, Inc., a Nasdaq-listed company based in Allen, Texas. 

According to the order, PFSweb engaged Woodward in January 2021 to provide accounting services in connection with the sale of the company’s ecommerce unit, LiveArea, which was responsible for generating 25% of PFSweb’s total annual revenue of over $342 million.  The company informed Woodward that information about the anticipated sale of LiveArea constituted material non-public information, and as part of his engagement Woodward agreed to be bound by PFSweb’s policies and procedures restricting officers and employees from trading in the company’s securities.  In May 2021, PFSweb informed Woodward and the company’s officers, directors and employees that they would not be allowed to buy or sell PFSweb securities between June 15, 2021 and August of that year.  Woodward nevertheless purchased 4,970 shares of the company’s stock during the blackout period.  In September 2021 he sold the stock for a profit of $21,326.36.  In a letter terminating his employment a few months later, Woodward acknowledged having purchased PFSweb stock while in possession of material non-public information.

The SEC found that Woodward’s conduct violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and that the violation was willful.  The SEC ordered Woodward to cease and desist from further violations, and denied him the privilege of practicing as an accountant before the SEC, with the right to apply for reinstatement after five years.  Under the order, Woodward is also required to pay disgorgement of $21,326.36 and civil penalties in an equal amount, plus prejudgment interest.

SEC Order 

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