The U.S. Securities and Exchange Commission settled with Zenefits and its former chief executive officer over charges the company misled investors by failing to disclose employees were selling insurance without a license.
Zenefits, a venture-backed broker of health insurance to businesses, will pay $450,000, and Parker Conrad, the co-founder and ex-CEO, will pay about $534,000. The SEC said Zenefits, under Conrad’s leadership, sold insurance in states without the appropriate licenses and that Conrad had created a software tool to help skirt the time requirements for legally mandated pre-licensing training in California. Neither the company nor Conrad admitted wrongdoing in the settlement.
The fines pale in comparison to the $11 million in penalties that Zenefits has agreed to pay in at least 40 states. Last year, Zenefits reset expectations with investors by renegotiating its valuation to $2 billion from $4.5 billion in exchange for avoiding potential lawsuits. The company has raised more than $550 million since it was founded four years ago.
“This settlement closes the chapter on a journey we began 18 months ago to transform Zenefits through new values and leadership,” Josh Stein, general counsel for Zenefits, said in a statement. “We are pleased that the SEC clearly acknowledged our cooperation, our extraordinary remedial efforts, and our commitment to compliance.”