Lovesac to Pay SEC $1.5 Million Over Scheme That Buried Expenses

Sectional sofamaker Lovesac Co. agreed to pay $1.5 million to settle US Securities and Exchange Commission allegations that two former executives devised a fraudulent accounting scheme to meet a key Wall Street metric.

The executives hid $2.2 million of shipping expenses after it was discovered the costs had been incorrectly recorded, the agency said in a statement on Tuesday.

The move let the company avoid the expense and public attention of restating prior financial results, and it helped the company hit its gross margin projections, the regulator wrote in settlement documents filed in federal court in Connecticut.

That “led ...