SEC SETTLES CHARGES OF EVADING INTERNAL CONTROLS WITH FORMER CFO

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
Former CFO Agrees to Settle Charges of Evading Internal Controls to Pay for Unauthorized Travel and Entertainment Expenses
The Securities and Exchange Commission announced today that Subramanian Krishnan (Krishnan), the former Chief Financial Officer (CFO) of Digi International, Inc. (Digi), has agreed to settle the Commission’s civil action against him. The Commission’s complaint, filed September 28, 2012, in the U.S. District Court for the District of Minnesota, alleges that Krishnan engaged in conduct which resulted in the filing of inaccurate reports and accompanying certifications in Digi’s annual quarterly reports from March 2005 through May 2010. The complaint alleges that Krishnan engaged in a course of conduct, that resulted in corporate funds being used to pay for unauthorized travel and entertainment expenses. Krishnan authorized such expenses for Digi employees, caused the Company to file inaccurate reports, failed to enforce Digi’s internal controls, demonstrated a lack of management integrity, and wrongly certified that Digi’s internal controls were effective.


Simultaneously with the Commission’s complaint, without admitting or denying the allegations in the Commission’s complaint, Krishnan had previously consented to a final judgment permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. Krishnan is also permanently restrained and enjoined from future violations of Sections 13(a) and 13(b)(5) and Rules 12b-20, 13a-1, 13a-13, 13a-14, 13b2-1 and 13b2-2 thereunder of the Exchange Act and from aiding and abetting violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.

Under today’s announcement, Krishnan consented to the entry of a judgment prohibiting him from acting as an officer or director of a public company for a period of five years following the date of the filing of the Commission’s complaint and imposing a $60,000 civil penalty. Krishnan also has consented to the issuance of a Commission order, pursuant to Rule 102(e)(3) of the Commission’s Rules of Practice, suspending him from appearing or practicing as an accountant before the Commission with the right to apply for reinstatement after five years.

Jennifer Moore, Justin J. Sutherland, and Karen I. Martinez conducted the Commission’s investigation. Daniel J. Wadley and Thomas M. Melton led the litigation.