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Vince McMahon, the co-founder and former CEO of WWE, has been charged by the U.S. Securities and Exchange Commission (SEC) for violating federal securities laws by failing to disclose two settlement agreements totaling $10.5 million.
As part of a settlement agreement, McMahon agreed to pay a $400,000 civil penalty and reimburse WWE approximately $1.33 million.
Vince McMahon, who left his longtime perch at WWE under a cloud last year, is paying more than $1.7 million to settle charges from the SEC alleging he failed to disclose hush money payments to two women https://t.co/wkDcf0xA1C
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These settlements, which were made to women who had accused McMahon of sexual misconduct, were not reported to the WWE board, legal department, or auditors, causing significant misstatements in WWE's financial records for 2018 and 2021.
According to the SEC, McMahon's failure to inform WWE about the settlements violated the Securities Exchange Act.
"McMahon consented to the entry of the SEC's order finding that he violated the Securities Exchange Act by knowingly circumventing WWE's internal accounting controls and that he directly or indirectly made or caused to be made false or misleading statements to WWE's auditor," the SEC stated in its official announcement.
The two settlements in question were made in 2019 and 2022. One of the settlements involved a payment of $3 million to Janel Grant, a former WWE employee, in exchange for her agreement to remain silent about their alleged sexual relationship and release any potential claims against McMahon and WWE.
The second settlement required McMahon to pay $7.5 million to a former WWE independent contractor who accused McMahon of sexual assault in 2005.
The SEC claims that McMahon's failure to disclose these payments resulted in WWE overstating its financials.
"Because the payments required by McMahon's 2019 and 2022 agreements were not recorded, WWE overstated its 2018 net income by approximately 8% and its 2021 net income by about 1.7%," the SEC's order stated.
As a result, WWE had to restate its financial statements in August 2022, once the board discovered these unreported settlements.
The SEC also pointed out that McMahon's actions violated company policy.
"Company executives cannot enter into material agreements on behalf of the company they serve and withhold that information from the company's control functions and auditor," said Thomas P. Smith Jr., associate regional director of the SEC's New York regional office.
In addition to the SEC charges, McMahon is facing ongoing legal challenges. In January 2024, Grant filed a civil lawsuit against McMahon, accusing him of sexual assault and trafficking.
McMahon has denied these allegations.
The lawsuit, which also names former WWE executive John Laurinaitis, is ongoing in U.S. District Court in Connecticut. While McMahon has denied the claims, the case remains active.
The SEC settlement also includes McMahon's reimbursement of WWE for the costs associated with the investigations into these payments.
In response to the investigation, McMahon resigned from his role as WWE CEO in 2022. However, he made a comeback in January 2023 as WWE's executive chairman and played a key role in the company's merger with UFC's parent company Endeavor, which led to the creation of TKO Group Holdings.
McMahon resigned from the TKO board in January 2024 following the filing of the civil lawsuit.
Despite the settlement, McMahon's legal battles are far from over.
The SEC's charges provide further evidence of McMahon's failure to adhere to corporate governance standards, while the civil case and ongoing criminal investigation by the Department of Justice suggest that the fallout from McMahon's actions at WWE may continue to unfold.
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"The case is closed. Today ends nearly three years of investigation by different governmental agencies," a statement from McMahon reads. "There has been a great deal of speculation about what exactly the government was investigating and what the outcome would be."
"As today's resolution shows, much of that speculation was misguided and misleading. In the end, there was never anything more to this than minor accounting errors with regard to some personal payments that I made several years ago while I was CEO of WWE. I'm thrilled that I can now put all this behind me."
Grant's legal team has issued a statement (via Fightful) in the wake of McMahon's settlement of the SEC charges.
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"During his time leading WWE, Vince McMahon acted as if rules did not apply to him, and now we have confirmation that he repeatedly broke the law to cover up his horrifying behavior, including human trafficking."
"The SEC's charges prove that the NDA Vince McMahon coerced Ms. Grant into signing violates the law, and therefore her case must be heard in court."
"While prosecutors for the Southern District of New York continue their criminal investigation, we look forward to bringing forward new evidence in our civil case about the sexual exploitation Ms. Grant endured at WWE by Vince McMahon and John Laurinaitis."
Vince McMahon is a former WWE CEO, entrepreneur, and media mogul, widely known for transforming professional wrestling into a global entertainment empire. He co-founded WWE (formerly WWF) in 1982, serving as its chairman and CEO until 2022.
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