The Securities and Exchange Commission (SEC) has charged Vince McMahon, the former head of World Wrestling Entertainment (WWE), with failing to disclose settlement agreements totaling $10.5 million related to sexual conduct. These undisclosed agreements were made with two women on behalf of himself and the WWE. As a result, McMahon has agreed to settle the administrative charges, paying a civil penalty of $400,000 and reimbursing WWE $1.33 million.
In a statement, the SEC revealed that McMahon's actions led WWE to make "material misstatements" in its 2018 and 2021 financial statements. The undisclosed settlements became known in spring 2022 after WWE's board convened a special meeting to address allegations against McMahon. Consequently, McMahon resigned as executive chairman of TKO Group following a lawsuit filed by Grant, which remains pending in the U.S. District Court in Connecticut.
One settlement involved McMahon paying $3 million to a former WWE employee in exchange for her silence regarding their relationship and to release any potential legal claims against both McMahon and WWE. Another agreement required McMahon to pay a former independent contractor who claimed to have had a relationship with him in 2005.
The SEC noted that McMahon's failure to report these personal payments resulted in WWE overstating its net income by about 8% in 2018 and approximately 1.7% in 2021. These payments were not recorded as expenses by the company, leading to the financial discrepancies.
"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." – Thomas Smith Jr., associate regional director in the SEC's New York regional office.
The investigation, authorized by WWE's board, uncovered about $14.6 million in unrecorded expenses paid or due to be paid by McMahon. Despite settling the charges, McMahon has not fully reimbursed WWE or its successor for profits and incentive-based compensation received during the relevant period.
"McMahon received incentive-based compensation and realized profits from the sale of WWE common stock during the 12-month period following the filing of financial statements that WWE subsequently restated due to the facts described herein," – SEC's order.
"McMahon has not fully reimbursed WWE or its successor in interest for these profits and incentive-based compensation and therefore violated Section 304 of the Sarbanes-Oxley Act of 2002." – SEC's order.
McMahon returned as WWE's executive chairman in January 2023 and later facilitated a merger with the parent company of Ultimate Fighting Competition and Endeavor Group Holdings, forming TKO Group Holdings in September 2023. His wife, Linda McMahon, who served as head of the federal Small Business Administration during President Trump's first term, remains a notable figure linked to his endeavors.
In response to the resolution of the case, McMahon downplayed the severity of his actions.
"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." – Vince McMahon.
He expressed relief at the conclusion of the investigation, which spanned nearly three years and involved multiple government agencies.
"The case is closed. Today ends nearly three years of investigation by different governmental agencies. There has been a great deal of speculation about what exactly the government was investigating and what the outcome would be." – Vince McMahon.
"As today's resolution shows, much of that speculation was misguided and misleading," – Vince McMahon.