SEC Fines WEX Inc. $350,000 for Internal Accounting Control Failures Relating to Its Brazilian Branch

The US Securities and Exchange Commission (SEC) announced on Monday that it has settled charges against WEX Inc. (WEX) violating the reporting, books and records, and internal accounting control provisions of the federal securities laws.

WEX is based in Portland, Maine, and claims to be a a financial technology service provider. The SEC's order found that WEX's correction of accounting errors at its Brazilian subsidiary (WEX Brazil) resulted in WEX's net income under U.S. Generally Accepted Accounting Principles (GAAP) being reduced by 61.2% in the fiscal year 2016. These accounting errors were the result of WEX's insufficient internal accounting controls.

According to the SEC's order, in 2016 and 2017, WEX's independent auditor found significant deficiencies in WEX's Internal Control Over Financial Reporting (ICFR) in connection with accounting errors at WEX Brazil. The order finds that additional accounting issues arose during the close of WEX's 2018 fiscal year. Specifically, there were errors in WEX Brazil's financial statements back to fiscal year 2013 totaling approximately $85.5 million, including about $8 million in suspected theft or unauthorized transactions by former WEX Brazil employees. WEX management concluded that the errors at WEX Brazil were the result of material weaknesses in the company's ICFR.

Without admitting or denying the findings, WEX has agreed to cease and desist from committing or causing any future violations of these provisions and to pay a civil penalty of $350,000.