In re Marvell Technology Group

 
1 
 
 
UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES ACT of 1933 
Release No. 10684 / September 16, 2019 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 86971 / September 16, 2019 
 
ACCOUNTING AND AUDITING ENFORCEMENT  
Release No. 4076 / September 16, 2019 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-19454 
 
 
 
In the Matter of 
 
Marvell Technology Group, Ltd., 
 
Respondent. 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933 AND SECTION 21C OF THE 
SECURITIES EXCHANGE ACT OF 1934, 
MAKING FINDINGS AND IMPOSING A 
CEASE-AND-DESIST-ORDER  
  
 
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 
Act”) against Marvell Technology Group, Ltd. (“Marvell” or “Respondent”).   
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party and without admitting or denying the findings 
herein, except as to the Commission’s jurisdiction over it and the subject matter of these 
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 

 
2 
 
the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order 
(“Order”), as set forth below.   
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  
 
A. Introduction 
 
1. This matter concerns an undisclosed revenue management scheme by Marvell 
Technology Group. Faced with a substantial decline in customer demand in its core product 
markets, and concerned about the adverse consequences that would result from missing its public 
guidance, Marvell orchestrated a plan to accelerate, or pull-in, sales that had originally been 
scheduled for future quarters to the current quarter in order to close the gap between actual and 
forecasted revenue, meet publicly-issued guidance, and mask declining sales. As a result, Marvell 
made materially misleading public statements and omitted to disclose certain facts regarding its 
financial results for the fourth quarter of fiscal year 2015 (Q4 FY2015) and first quarter of fiscal 
year 2016 (Q1 FY2016). In particular, Marvell made positive statements regarding its Q4 FY2015 
results and met its revised public revenue guidance in Q1 FY2016 without disclosing the 
significant impact on revenues from its use of pull-ins. Marvell also failed to disclose that the pull-
ins reduced future sales, thereby making it exceedingly difficult for Marvell to meet its revenue 
guidance in future quarters, particularly in a declining market. 
2. From approximately January 2015 through July 2015 (the “Relevant Period”), 
Marvell’s senior management directed the effort to pull-in sales for the purpose of meeting public 
revenue guidance. Marvell’s senior management placed significant pressure on its sales employees 
to push customers to agree to accept products earlier than scheduled, and it closely tracked the gap 
between actual and forecasted revenue, and the use of pull-ins to bridge that gap.    Marvell used 
the pull-ins despite internal concerns that the pull-ins were masking declining market conditions 
and also obfuscating the company’s deteriorating financial results, thereby misleading investors. 
Senior management, however, refused to abandon its use of pull-ins, and those who raised 
concerns were ignored. Marvell’s senior management also failed to inform the company’s Board of 
Directors or its independent auditor of its pull-in scheme. 
3. As a result of such conduct, Marvell violated Sections 17(a)(2) and 17(a)(3) of the 
Securities Act and Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 12b-20 
thereunder. 
B. Respondent 
 
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 
other person or entity in this or any other proceeding. 
 

 
3 
 
4. Marvell Technology Group Ltd. is incorporated in Hamilton, Bermuda, and is 
principally headquartered in Santa Clara, California. Marvell is a producer of semiconductor 
components used in, among other things, data storage/hard drives, mobile phones, and network 
devices. A significant portion of Marvell’s revenue comes from certain key customers. During the 
Relevant Period, Marvell operated primarily through two divisions – Datacom and Storage. 
Marvell’s securities (ticker: MRVL), which are registered with the Commission pursuant to 
Section 12(b) of the Exchange Act, are listed on the NASDAQ. Marvell’s fiscal year ends on the 
Saturday nearest January 31. In May 2008, Marvell entered into a settlement with the Commission 
for its violation of antifraud, internal controls, books and records, and financial reporting 
provisions of the federal securities laws pertaining to improperly backdating stock options and paid 
a $10 million penalty. SEC v. Marvell Technology Group, Ltd. and Weili Dai, Case No. CV 08-
2367-HRL (N.D. Cal. filed May 8, 2008). 
C. Facts 
 
1. Marvell Engaged in a Pull-in Scheme to Meet Publicly-Disclosed Guidance 
 
5. In late 2014, Marvell’s senior management had grown frustrated with the 
company’s recent revenue performance.  Marvell had missed publicly-disclosed revenue guidance 
in the second and third quarters of fiscal year 2015 and was headed toward another potential miss 
in the fourth quarter. Senior management perceived that the sales teams were not aggressive 
enough in generating sales in the company’s two main divisions of Datacom and Storage.  
Historically, revenue and sales targets had been set from the bottom-up, where sales teams 
influenced the process by providing forecasts of their sales projections based on their 
understanding of customers’ needs. However, in an effort to exert more control over the sales 
force, senior management, in late 2014, imposed top-down revenue and sales targets, which were 
reflected in the company’s Annual Operating Plan (AOP) for FY 2016.  Sales staff protested the 
top-down targets set by senior management, believing they were not realistic and had been 
developed without proper consideration of customers’ needs. The pressure to meet the targets set in 
the AOP became the impetus for Marvell’s pull-in effort.  
 
6. Around the same time, Marvell began to experience a substantial decline in 
customer demand.  The decline was initially felt in the company’s China mobile market 
(Datacom), where the company had made significant investments in recent years, and eventually 
spread to the storage segment, Marvell’s flagship business unit. By January 2015, the last month of 
Q4 FY2015, Marvell’s senior management was aware of a growing gap between actual revenue 
and forecasted revenue for the quarter.  
 
7. In response to this growing gap, Marvell’s senior management resorted to the use of 
pull-ins.
2
 Marvell’s senior management made this decision no later than mid-January 2015, 
approximately two weeks prior to the end of the company’s Q4 FY2015, at which time Marvell 
                                                 
2
  Marvell’s revenue recognition policy contained a section pertaining to pull-ins, which was not publicly 
disclosed, that defined a pull-in as “a transaction where Marvell initiates and obtains agreement from customer to 
modify an existing sales order scheduled shipment date from a subsequent quarter into the current quarter.” The policy 
required formal tracking of pull-in transactions.   

 
4 
 
was facing a revenue shortfall of approximately $50 million against forecasted revenue guidance of 
$880 to $900 million. Internally, Marvell referred to the effort as the “pull-in plan.” A primary 
motivation for the pull-in effort was concern that missing revenue guidance would adversely 
impact the company’s stock price. 
 
8. The pull-in effort was orchestrated and directed at the highest levels of Marvell. 
Senior management, including executives in sales, finance, and sales operations, were aware of the 
pull-in effort and tracked the company’s progress in meeting its revenue targets through the use of 
pull-ins. Senior management also routinely pressured sales managers to obtain additional revenue 
through pull-ins to meet their targets.  In carrying out the plan, senior management was assisted by 
the Financial Planning and Analysis unit (FP&A), which tracked the gap between the actual 
revenue (referred to internally as organic or natural revenue) and forecasted revenue, as well as the 
amount of pull-ins being used to close the gap. FP&A also tracked “backlog,” which was the 
amount of predicted revenue in a given quarter based on customer orders, as well as the “backlog 
percentage,” which was the ratio between customer orders and revenue targets for the quarter and 
used to determine whether revenue targets were supported by anticipated sales.   
 
9. Marvell frequently offered various financial incentives to persuade its customers to 
agree to pull-ins. As a general matter, Marvell relied on certain key customers to generate a 
significant portion of its revenue, and those customers provided periodic forecasts of product they 
intended to purchase from Marvell in a given quarter. Marvell’s pull-in plan, however, required its 
customers to accept product earlier than they had requested, and Marvell, with the approval of 
senior management, sought to incentivize its customers to agree to the pull-ins. Among other 
things, Marvell obtained pull-in sales by offering price rebates, discounted prices, free products, 
and extended payment terms, at times inconsistent with its revenue recognition policy. Yet, even 
with these incentives, Marvell’s customers were at times reluctant to agree to pull-in sales.  As one 
Marvell employee remarked in reporting on a successful pull-in, Marvell had to “beg” the 
customer to agree to a multi-million dollar pull-in in exchange for $75,000 in free parts. 
 
10. Marvell used pull-ins in the following three quarters:  
 
a. Fourth Quarter of Fiscal Year 2015 (ended January 31, 2015) 
 
11. Communications between FP&A and the sales managers in the final days of Q4 
FY2015 (January 2015) reflected the substantial pressure on the company to meet its revenue 
targets and the use of pull-ins as part of that effort. For example, when a sales manager expressed 
concern at his ability to meet his revenue target, even with the use of pull-ins, the head of FP&A at 
that time (and future interim CFO) simply ignored the concern, explaining to a subordinate: “We 
are aware of this, [but he (the sales manager)] has a target given to him by [senior management].” 
The same sales manager warned that the pull-ins were overstating what the actual demand was for 
Marvell’s products: “We are pulling teeth to get to $430 [million] in Q4, with [the] natural number 
at $400 [million].” During this time period, Marvell also began to receive information indicating 
that the company could be losing market share in the declining market. In particular, the former  
senior FP&A official observed that although Marvell was struggling to meet its Q4 revenue goals, 
it appeared that industry peers were meeting their guidance. The same official closely monitored 

 
5 
 
Marvell’s share of the total available market (“TAM”) for the storage segment and how Marvell’s 
revenues compared to this metric.   
 
12. In Marvell’s Q4 FY2015, which ended January 31, 2015, Marvell pulled-in $24 
million of sales originally scheduled for future quarters, of which $20 million came from the 
storage segment. 
 
13. On February 19, 2015, Marvell announced revenues of $857 million for Q4 
FY2015 and a non-GAAP EPS of $0.25.  Marvell missed its low-end revenue guidance of $880 
million but beat its EPS guidance by one penny.  Marvell characterized the financial results as 
“overall on target” and during its earnings call touted an increase of both sales and market share 
gains in the largest component of the storage business, hard drives (HDD).  On March 26, 2015, 
Marvell also filed its Form 10-K for Fiscal Year 2015 that contained materially misleading 
information about the company’s fourth quarter revenue performance.  
 
14. Marvell did not disclose that 3% of its total Q4 FY2015 revenues (approximately 
$24 million), and 5% of its storage revenues (approximately $20 million), were derived from pull-
ins. Notwithstanding its public comments touting its gains in its HDD business, without the benefit 
of the pull-ins, Marvell’s HDD sales actually decreased. In addition, without the pull-ins, Marvell 
would have missed the low-end of its revenue guidance by the far greater margin of approximately 
$50 million, thereby preventing the company from characterizing its financial results as “overall on 
target.”   
 
b. First Quarter of Fiscal Year 2016 (ended May 2, 2015) 
 
15. The pressure to engage in pull-ins steadily increased throughout 2015, particularly 
as the gap between revenue guidance and actual revenues grew. The pressure became especially 
acute in Q1 FY2016. Early in Q1 FY2016, even as the backlog percentage for the quarter was 
extraordinarily low, Marvell’s senior management indicated that the forecasted numbers needed to 
be met and emphasized that “everything and anything needed to be shipped.”  
 
16. By mid-April, several weeks before quarter end, FP&A raised alarm at the growing 
gap between actual revenue and forecasted revenue. As one FP&A employee warned, first quarter 
revenues would be “way off” guidance of $810-$830 million and were likely to be in the $641-
$669 million range, or almost $200 million short of the upper-level guidance. In order to close the 
gap, Marvell again resorted to the use of pull-ins of sales originally scheduled for subsequent 
quarters. The vast majority of the pull-ins were used in the company’s storage segment.   
 
17. Less than two weeks before the quarter ended, Marvell, in the face of the large gap 
between actual and forecasted revenue, made a public announcement reducing its revenue 
guidance for Q1 FY2016. In particular, on April 24, 2015, Marvell announced a revised quarterly 
revenue guidance of $710-$740 million. Internal documents at the time, however, indicated that 
Marvell would need approximately $50 million of pulled-in revenue to meet this reduced public 
revenue guidance. Marvell did not disclose that it would need to pull-in a significant amount of 
revenue from future quarters in order to meet its revised revenue guidance. By not disclosing the 

 
6 
 
pull-ins, Marvell also was able to mask the significant decline in sales and market share it was 
experiencing.     
 
18. In Marvell’s Q1 FY2016, which ended May 2, 2015, Marvell pulled-in $64 million 
of sales scheduled for future quarters, of which $55 million came from the storage segment. 
 
19. On May 21, 2015, Marvell announced it had met its publicly-disclosed guidance, 
with $724 million in total revenues, of which $348 million was storage revenue. Marvell did not 
disclose that it used pull-ins totaling 9% of total revenues and 16% of storage revenues for the 
purpose of meeting the revenue guidance.  The large number of pull-ins masked what would have 
been Marvell missing the low end of its revenue guidance by approximately $30 million and a 
market share loss.  On June 4, 2015, Marvell also filed its Form 10-Q for the First Quarter of Fiscal 
Year 2016 that contained materially misleading information about the company’s first quarter 
revenue performance.  
 
c. Second Quarter of Fiscal Year 2016 (ended August 1, 2015) 
 
20. Several weeks into Q2 FY2016, Marvell’s senior management renewed its pressure 
on its sales managers to pull-in as much revenue as possible to meet the quarter’s revenue targets. 
Internal FP&A analyses reflected that the combination of declining market demand coupled with 
the effects of the prior quarter pull-ins had left the company almost $100 million short of its public 
revenue guidance of $710-$740 million. Again, senior management’s response was that the 
company could simply not afford to miss its revenue guidance. As one Marvell employee 
explained: “[W]e need to pull into this QTR, we are still short, we will worry about next QTR 
later.” 
 
21. In Marvell’s Q2 FY2016, which ended August 1, 2015, Marvell pulled-in a record 
amount of $77 million of sales originally scheduled for future quarters. The pull-ins totaled 11% of 
total revenue for the quarter.  
 
22. Shortly after the end of the quarter, in August 2015, Marvell’s Board of Directors 
first became aware of senior management’s use of pull-ins to meet public revenue guidance. On 
September 11, 2015, Marvell announced a delay in filing its Form 10-Q for Q2 FY2016 and the 
commencement of an internal investigation to examine, among other things, the company’s use of 
pull-ins. Shortly thereafter, Marvell’s independent auditor resigned. 
 
2. The Use of Pull-ins Adversely Impacted Marvell’s Future Revenue 
 
23. Within Marvell, it was understood that pull-ins negatively impacted Marvell’s 
revenue prospects in future quarters. Because Marvell’s customers provided quarterly forecasts, on 
a periodic basis, of how much product they intended to purchase from Marvell, if Marvell 
requested a customer to accept shipment of product earlier than forecast, Marvell could record the 
sale as occurring in the earlier quarter but, all things being equal, would lose that sale in the later 
quarter (when it was previously scheduled). The adverse impact of pull-ins on future quarter 
revenue was particularly pronounced in the declining market during the Relevant Period, as 
Marvell had little hope of generating additional sales in future quarters.  

 
7 
 
 
24. From the outset of the pull-in effort, Marvell’s senior management was warned of 
the consequences of pull-ins on future revenue. In the final days of Q4 FY2015, a senior sales 
manager, who was being pressed to pull-in revenue, warned that the pull-ins would make it all the 
more difficult to meet—in his words, pull-ins would “destroy”— revenue targets for Q1 FY2016. 
Days after the end of the quarter, another senior operations manager warned that the pull-ins “did a 
lot of damage in Q4 and [Marvell could not] be as aggressive [in Q1].” Sales managers also alerted 
senior management that the pull-ins were masking the real cause of Marvell’s revenue problems, 
i.e., declining market conditions. One manager tried to explain that he could not reasonably be 
expected to meet the Q1 FY2016 AOP target set by senior management given the “really weak” 
market conditions.  
 
25. In Q1 FY2016, as FP&A continued to track the growing gap between actual and 
forecasted revenue, at the direction of senior management it pressed sales teams to meet their 
targets. Again, sales teams pushed back, warning that the effects of the Q4 pull-ins plus the 
declining market demand made it all but impossible for the company to meet its revenue targets. 
One senior operations manager noted, approximately mid-way through the quarter: “based on the 
damage we had to create in Q4 in regards to pulls, we started Q1 in the hole with the cabinets left 
pretty bare . . . . We did not empty the cabinets the first month for Q1 of last year like we did this 
time.”  When that same senior operations manager pressed for more pull-ins, a sales employee 
responded: “We have tried our best to pull in. I think it’s not realistic to expect such a huge 
increase of revenue after [huge Q4] pull in . . . . And I strongly suggest not [to] keep pulling in like 
this. It’s too risky.” 
 
26. Even within FP&A, which performed a critical role in assisting senior management 
in implementing the pull-in plan, there came to be a realization that the pull-ins were having 
adverse impacts on future quarter revenue. One mid-level FP&A manager, in considering a sales 
manager’s ability to meet his revenue targets, noted to the head of FP&A: “I personally think it’s a 
miracle that he’s not de-committing on the revenue target given how much we pulled in [in] Q4.” 
 
27. Marvell’s senior management ultimately ignored the warnings and pressed ahead 
with the pull-in effort.  Half way through Q1 FY2016, a senior operations manager reported that 
senior management had “ordered full speed ahead and is pushing everyone to achieve their 
[revenue targets]” and that senior management “is not going to budge from the target” set for Q1. 
The solution, according to the same manager, was to keep pulling-in: “[W]e have to ship anything 
and everything possible.”  
 
28. By the end of Q1 FY2016, and into Q2 FY 2016, Marvell’s continuous pull-in 
effort met increased resistance from its customers, who were starting to carry excess inventory of 
Marvell’s products as a result of the repeated requests to accept early shipments. A senior 
operations manager was told that customers “did not like the snowball effect of the pull-ins and 
holding huge inventories.” Internal analyses within Marvell indicated that the cumulative effects of 
the pull-ins on its customers’ inventory presented risks to Marvell’s future revenue. 
 
3. Marvell Ignored Those who Expressed Concern with the Pull-in Scheme  
 

 
8 
 
29. Several company employees pushed back on Marvell’s reliance on the use of pull-
ins to bridge the gap between actual revenue and publicly-disclosed guidance. These persons, 
however, were ignored.  
 
30. A principal source of opposition to the pull-in plan came from sales managers, who 
were most familiar with their customers’ needs as well as market conditions. Marvell’s senior 
management was warned that the company was facing a substantial decline in market demand that 
rendered the company’s revenue targets unrealistic. As one sales manager explained to a senior 
Marvell executive in the final month of Q1 FY 2016: “Data has been published this morning that 
Q1 shipments [were] down to the lowest level since [. . .] 2001 . . . . There is really weakness in the 
storage industry.” However, when sales managers cautioned that pull-ins were masking declining 
market demand, the response from Marvell’s senior management was to conduct more, not less, 
pull-ins.   
 
31. Additional opposition to Marvell’s pull-in plan came from a senior level Marvell 
employee with responsibilities related to Marvell’s accounting and financial disclosures. During 
April 2015, the employee cautioned certain members of senior management, including the 
president, the CFO, and the head of FP&A, that Marvell’s use of pull-ins could trigger disclosure 
obligations because they could be masking a downturn in the company’s financial results. The 
employee cited prior SEC actions against public companies that had distorted their financial results 
through unusual sales practices. Rather than heed the employee’s warnings, Marvell’s senior 
management did the opposite—the warnings were ignored, and they misled the employee by 
falsely asserting that the pull-ins were not being used primarily or solely to meet revenue guidance. 
At the conclusion of one of the aforementioned discussions, the employee was directed to send an 
e-mail to senior management indicating that there were no issues with the pull-ins. The employee 
sent the e-mail as requested. 
 
4. Marvell Misled Investors by Failing to Disclose the Purpose, Scope, and Effect of the 
Pull-in Transactions 
 
32. As noted above, Marvell reported its financial results for Q4 FY2015 and Q1 
FY2016 in earnings calls and in reports filed with the Commission, without disclosing that a 
significant portion of its revenue had resulted from the use of pull-ins intended to meet the 
company’s public revenue guidance.  
 
33. By failing to disclose this information, Marvell misled investors in the following 
ways. First, investors were left with the misleading impression that Marvell was able to meet its 
public guidance organically, through normal customer demand for its products. Internally, 
however, Marvell closely tracked what it considered to be its natural or organic revenue (without 
the use of pull-ins). Senior management was aware that its natural revenue was far below the 
company’s public guidance, and that this was primarily because of a significant decline in 
customer demand caused by changing market conditions. Without the same information, investors 
lacked an ability to evaluate financial results in context and compare results across periods. 
 
34. In addition, investors were unaware of the adverse impact that pull-ins were having 
on revenue and sales in future quarters. Internally, senior management was fully aware that the 

 
9 
 
pull-ins were simply shifting revenue from one quarter to another, and sales professionals 
repeatedly warned senior management of the “cannibalization” of future revenue, particularly in 
the company’s key storage segment. Senior management was also aware that, in light of the 
deteriorating market conditions, it was highly unlikely that customers would agree to purchase 
products beyond what they had earlier forecasted. Without such information, investors lacked an 
ability to evaluate Marvell’s future revenue and sales prospects and judge the company’s ability to 
meet future guidance. And finally, investors were unaware that the pull-ins were masking declining 
sales and market share. 
 
35. Marvell’s internal disclosure process failed to ensure that it adequately considered 
its disclosure obligations surrounding its use of pull-ins. A key part of the disclosure process was 
the Disclosure Committee. The Disclosure Committee was responsible for, among other things, 
assisting Marvell’s senior management in ensuring the accuracy and timeliness of the company’s 
financial disclosures. During the Relevant Period, the Disclosure Committee met several times, 
including to review and approve the company’s disclosures for Q4 FY2015 and Q1 FY2016. The 
Disclosure Committee was not made aware of, nor did it consider, whether the company’s use of 
pull-ins needed to be disclosed publicly.  
 
36. Marvell’s senior management during the Relevant Period, including its then 
president, CFO and head of FP&A, did not consider or discuss the issue of whether the company 
needed to disclose its use of pull-ins other than during the aforementioned April 2015 meetings 
where they ignored the cautions of a senior level employee.  Senior management also failed to 
ensure that the Disclosure Committee adequately considered the issue. It failed to do so even after 
at least one employee cautioned senior management that Marvell’s use of pull-ins implicated 
disclosure obligations because they were masking declining financial results.  
 
37. Marvell’s Board of Directors was not informed of senior management’s efforts to 
meet publicly-disclosed revenue guidance through the use of pull-ins. On at least two occasions, in 
documents that were to be provided to the Board, references to pull-ins that had existed in earlier 
drafts were deleted. Marvell also did not disclose to its independent auditor that the company had 
attempted to meet its public revenue guidance through the use of pull-ins.  
 
38. Marvell’s misleading statements were material. A reasonable investor, in 
considering whether to purchase or sell Marvell securities, would have found it important that 
Marvell was using pull-ins to generate sales for the purpose of meeting publicly-disclosed revenue 
targets and mask a significant downturn in sales, and that the pull-ins would adversely impact 
future revenue.  
 
5. Marvell’s Employee Stock Purchase Plan 
 
39. As part of its employee compensation, Marvell offered an Employee Stock 
Purchase Plan which allowed certain employees to purchase stock at a discounted price. During the 
Relevant Period, Marvell employees purchased company stock at a cost of approximately $11.88 
per share.  
 
D. Violations 

 
10 
 
 
40. Section 17(a)(2) proscribes obtaining “money or property by means of any untrue 
statement of a material fact or any omission to state a material fact necessary in order to make the 
statements made, in light of the circumstances under which they were made, not misleading.” 
Section 17(a)(3) proscribes engaging “in any transaction, practice, or course of business which 
operates or would operate as a fraud or deceit upon the purchaser.” A violation of these provisions 
does not require scienter and may rest on a finding of negligence. See Aaron v. SEC, 446 U.S. 680, 
685, 701-02 (1980). Marvell violated the foregoing provisions when it made materially misleading 
public statements and omitted to disclose certain facts regarding its financial results for Q4 
FY2015 and Q1 FY2016, and further engaged in an undisclosed effort to meet public revenue 
guidance through the use of pull-ins.  
 
41. Section 13(a) of the Exchange Act requires issuers such as Marvell to file periodic 
reports with the Commission containing such information as the Commission prescribes by rule. 
Form 10-K and Form 10-Q requires registrants to comply with Regulation S-K Item 303, which 
required Marvell to describe in the MD&A sections of the required periodic filings “any known 
trends or uncertainties that have had or that the registrant reasonably expects will have a material 
... unfavorable impact on net sales or revenues or income from continuing operations.”  The 
failure to provide the information required by Regulation S-K constitutes a violation under Section 
13(a) of the Exchange Act. Marvell used pull-ins to mask declining sales and markets, a trend, 
event, or uncertainty that was known to Marvell and was reasonably likely to have material effects 
on the registrant’s financial condition or results of operations.  Contrary to the requirements of 
Regulation S-K, Marvell failed to disclose the material impact of this known trend, event, or 
uncertainty on current and future revenues within its required MD&A sections of its Form 10-K for 
the fiscal year 2015 and its Form 10-Q for the first quarter of fiscal year 2016. As a consequence, 
Marvell violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 12b-20 
thereunder. 
IV. 
 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer.  
 
Accordingly, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange 
Act, it is hereby ORDERED that:   
 
A. Marvell shall cease and desist from committing or causing any violations and any 
future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 13(a) of the 
Exchange Act and Rules 13a-1, 13a-13, and 12b-20 thereunder. 
 
B. Marvell shall, within 10 days of the entry of this Order, pay a civil penalty in the 
amount of $5,500,000 to the Securities and Exchange Commission for transfer to the general fund 
of the United States Treasury, subject to  Exchange Act Section 21F(g)(3).  If timely payment is 
not made, additional interest shall accrue pursuant to SEC Rule of Practice 600 and 31 U.S.C. 
§3717.  Payment must be made in one of the following ways: 
 

 
11 
 
(1)  Respondent may transmit payment electronically to the Commission, which will 
provide detailed ACH transfer/Fedwire instructions upon request; 
 
(2)  Respondent may make direct payment from a bank account via Pay.gov through the 
SEC website at http://www.sec.gov/about/offices/ofm.htm; or 
 
(3)  Respondent may pay by certified check, bank cashier’s check, or United States 
postal money order, made payable to the Securities and Exchange Commission and 
hand-delivered or mailed to: 
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169  
 
Payments by check or money order must be accompanied by a cover letter identifying Marvell as 
the Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 
letter and check or money order must be sent to Anita Bandy, Associate Director, Division of 
Enforcement, Securities and Exchange Commission, 100 F Street N.E., Washington, DC 20549-
6561A. 
 
 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 
the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 
Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 
an additional civil penalty and shall not be deemed to change the amount of the civil penalty 
imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 
private damages action brought against Respondent by or on behalf of one or more investors based 
on substantially the same facts as alleged in the Order instituted by the Commission in this 
proceeding. 
  
 By the Commission. 
 
 
 
 
        Vanessa A. Countryman 
        Secretary 

1 

 

 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

 

SECURITIES ACT of 1933 

Release No. 10684 / September 16, 2019 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 86971 / September 16, 2019 

 

ACCOUNTING AND AUDITING ENFORCEMENT  

Release No. 4076 / September 16, 2019 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-19454 

 

 

 

In the Matter of 

 

Marvell Technology Group, Ltd., 

 

Respondent. 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933 AND SECTION 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934, 

MAKING FINDINGS AND IMPOSING A 

CEASE-AND-DESIST-ORDER  

  

 

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”) and Section 21C of the Securities Exchange Act of 1934 (“Exchange 

Act”) against Marvell Technology Group, Ltd. (“Marvell” or “Respondent”).   

 

II. 

 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party and without admitting or denying the findings 

herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of 



 

2 

 

the Securities Exchange Act of 1934, Making Findings and Imposing a Cease-and-Desist Order 

(“Order”), as set forth below.   

 

III. 

 

 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that:  

 

A. Introduction 

 

1. This matter concerns an undisclosed revenue management scheme by Marvell 

Technology Group. Faced with a substantial decline in customer demand in its core product 

markets, and concerned about the adverse consequences that would result from missing its public 

guidance, Marvell orchestrated a plan to accelerate, or pull-in, sales that had originally been 

scheduled for future quarters to the current quarter in order to close the gap between actual and 

forecasted revenue, meet publicly-issued guidance, and mask declining sales. As a result, Marvell 

made materially misleading public statements and omitted to disclose certain facts regarding its 

financial results for the fourth quarter of fiscal year 2015 (Q4 FY2015) and first quarter of fiscal 

year 2016 (Q1 FY2016). In particular, Marvell made positive statements regarding its Q4 FY2015 

results and met its revised public revenue guidance in Q1 FY2016 without disclosing the 

significant impact on revenues from its use of pull-ins. Marvell also failed to disclose that the pull-

ins reduced future sales, thereby making it exceedingly difficult for Marvell to meet its revenue 

guidance in future quarters, particularly in a declining market. 

2. From approximately January 2015 through July 2015 (the “Relevant Period”), 

Marvell’s senior management directed the effort to pull-in sales for the purpose of meeting public 

revenue guidance. Marvell’s senior management placed significant pressure on its sales employees 

to push customers to agree to accept products earlier than scheduled, and it closely tracked the gap 

between actual and forecasted revenue, and the use of pull-ins to bridge that gap.    Marvell used 

the pull-ins despite internal concerns that the pull-ins were masking declining market conditions 

and also obfuscating the company’s deteriorating financial results, thereby misleading investors. 

Senior management, however, refused to abandon its use of pull-ins, and those who raised 

concerns were ignored. Marvell’s senior management also failed to inform the company’s Board of 

Directors or its independent auditor of its pull-in scheme. 

3. As a result of such conduct, Marvell violated Sections 17(a)(2) and 17(a)(3) of the 

Securities Act and Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 12b-20 

thereunder. 

B. Respondent 

 

                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any 

other person or entity in this or any other proceeding. 

 



 

3 

 

4. Marvell Technology Group Ltd. is incorporated in Hamilton, Bermuda, and is 

principally headquartered in Santa Clara, California. Marvell is a producer of semiconductor 

components used in, among other things, data storage/hard drives, mobile phones, and network 

devices. A significant portion of Marvell’s revenue comes from certain key customers. During the 

Relevant Period, Marvell operated primarily through two divisions – Datacom and Storage. 

Marvell’s securities (ticker: MRVL), which are registered with the Commission pursuant to 

Section 12(b) of the Exchange Act, are listed on the NASDAQ. Marvell’s fiscal year ends on the 

Saturday nearest January 31. In May 2008, Marvell entered into a settlement with the Commission 

for its violation of antifraud, internal controls, books and records, and financial reporting 

provisions of the federal securities laws pertaining to improperly backdating stock options and paid 

a $10 million penalty. SEC v. Marvell Technology Group, Ltd. and Weili Dai, Case No. CV 08-

2367-HRL (N.D. Cal. filed May 8, 2008). 

C. Facts 
 

1. Marvell Engaged in a Pull-in Scheme to Meet Publicly-Disclosed Guidance 
 

5. In late 2014, Marvell’s senior management had grown frustrated with the 

company’s recent revenue performance.  Marvell had missed publicly-disclosed revenue guidance 

in the second and third quarters of fiscal year 2015 and was headed toward another potential miss 

in the fourth quarter. Senior management perceived that the sales teams were not aggressive 

enough in generating sales in the company’s two main divisions of Datacom and Storage.  

Historically, revenue and sales targets had been set from the bottom-up, where sales teams 

influenced the process by providing forecasts of their sales projections based on their 

understanding of customers’ needs. However, in an effort to exert more control over the sales 

force, senior management, in late 2014, imposed top-down revenue and sales targets, which were 

reflected in the company’s Annual Operating Plan (AOP) for FY 2016.  Sales staff protested the 

top-down targets set by senior management, believing they were not realistic and had been 

developed without proper consideration of customers’ needs. The pressure to meet the targets set in 

the AOP became the impetus for Marvell’s pull-in effort.  

 

6. Around the same time, Marvell began to experience a substantial decline in 

customer demand.  The decline was initially felt in the company’s China mobile market 

(Datacom), where the company had made significant investments in recent years, and eventually 

spread to the storage segment, Marvell’s flagship business unit. By January 2015, the last month of 

Q4 FY2015, Marvell’s senior management was aware of a growing gap between actual revenue 

and forecasted revenue for the quarter.  

 

7. In response to this growing gap, Marvell’s senior management resorted to the use of 

pull-ins.
2
 Marvell’s senior management made this decision no later than mid-January 2015, 

approximately two weeks prior to the end of the company’s Q4 FY2015, at which time Marvell 

                                                 
2
  Marvell’s revenue recognition policy contained a section pertaining to pull-ins, which was not publicly 

disclosed, that defined a pull-in as “a transaction where Marvell initiates and obtains agreement from customer to 

modify an existing sales order scheduled shipment date from a subsequent quarter into the current quarter.” The policy 

required formal tracking of pull-in transactions.   



 

4 

 

was facing a revenue shortfall of approximately $50 million against forecasted revenue guidance of 

$880 to $900 million. Internally, Marvell referred to the effort as the “pull-in plan.” A primary 

motivation for the pull-in effort was concern that missing revenue guidance would adversely 

impact the company’s stock price. 

 

8. The pull-in effort was orchestrated and directed at the highest levels of Marvell. 

Senior management, including executives in sales, finance, and sales operations, were aware of the 

pull-in effort and tracked the company’s progress in meeting its revenue targets through the use of 

pull-ins. Senior management also routinely pressured sales managers to obtain additional revenue 

through pull-ins to meet their targets.  In carrying out the plan, senior management was assisted by 

the Financial Planning and Analysis unit (FP&A), which tracked the gap between the actual 

revenue (referred to internally as organic or natural revenue) and forecasted revenue, as well as the 

amount of pull-ins being used to close the gap. FP&A also tracked “backlog,” which was the 

amount of predicted revenue in a given quarter based on customer orders, as well as the “backlog 

percentage,” which was the ratio between customer orders and revenue targets for the quarter and 

used to determine whether revenue targets were supported by anticipated sales.   

 

9. Marvell frequently offered various financial incentives to persuade its customers to 

agree to pull-ins. As a general matter, Marvell relied on certain key customers to generate a 

significant portion of its revenue, and those customers provided periodic forecasts of product they 

intended to purchase from Marvell in a given quarter. Marvell’s pull-in plan, however, required its 

customers to accept product earlier than they had requested, and Marvell, with the approval of 

senior management, sought to incentivize its customers to agree to the pull-ins. Among other 

things, Marvell obtained pull-in sales by offering price rebates, discounted prices, free products, 

and extended payment terms, at times inconsistent with its revenue recognition policy. Yet, even 

with these incentives, Marvell’s customers were at times reluctant to agree to pull-in sales.  As one 

Marvell employee remarked in reporting on a successful pull-in, Marvell had to “beg” the 

customer to agree to a multi-million dollar pull-in in exchange for $75,000 in free parts. 

 

10. Marvell used pull-ins in the following three quarters:  

 

a. Fourth Quarter of Fiscal Year 2015 (ended January 31, 2015) 

 

11. Communications between FP&A and the sales managers in the final days of Q4 

FY2015 (January 2015) reflected the substantial pressure on the company to meet its revenue 

targets and the use of pull-ins as part of that effort. For example, when a sales manager expressed 

concern at his ability to meet his revenue target, even with the use of pull-ins, the head of FP&A at 

that time (and future interim CFO) simply ignored the concern, explaining to a subordinate: “We 

are aware of this, [but he (the sales manager)] has a target given to him by [senior management].” 

The same sales manager warned that the pull-ins were overstating what the actual demand was for 

Marvell’s products: “We are pulling teeth to get to $430 [million] in Q4, with [the] natural number 

at $400 [million].” During this time period, Marvell also began to receive information indicating 

that the company could be losing market share in the declining market. In particular, the former  

senior FP&A official observed that although Marvell was struggling to meet its Q4 revenue goals, 

it appeared that industry peers were meeting their guidance. The same official closely monitored 



 

5 

 

Marvell’s share of the total available market (“TAM”) for the storage segment and how Marvell’s 

revenues compared to this metric.   

 

12. In Marvell’s Q4 FY2015, which ended January 31, 2015, Marvell pulled-in $24 

million of sales originally scheduled for future quarters, of which $20 million came from the 

storage segment. 

 

13. On February 19, 2015, Marvell announced revenues of $857 million for Q4 

FY2015 and a non-GAAP EPS of $0.25.  Marvell missed its low-end revenue guidance of $880 

million but beat its EPS guidance by one penny.  Marvell characterized the financial results as 

“overall on target” and during its earnings call touted an increase of both sales and market share 

gains in the largest component of the storage business, hard drives (HDD).  On March 26, 2015, 

Marvell also filed its Form 10-K for Fiscal Year 2015 that contained materially misleading 

information about the company’s fourth quarter revenue performance.  

 

14. Marvell did not disclose that 3% of its total Q4 FY2015 revenues (approximately 

$24 million), and 5% of its storage revenues (approximately $20 million), were derived from pull-

ins. Notwithstanding its public comments touting its gains in its HDD business, without the benefit 

of the pull-ins, Marvell’s HDD sales actually decreased. In addition, without the pull-ins, Marvell 

would have missed the low-end of its revenue guidance by the far greater margin of approximately 

$50 million, thereby preventing the company from characterizing its financial results as “overall on 

target.”   

 

b. First Quarter of Fiscal Year 2016 (ended May 2, 2015) 
 

15. The pressure to engage in pull-ins steadily increased throughout 2015, particularly 

as the gap between revenue guidance and actual revenues grew. The pressure became especially 

acute in Q1 FY2016. Early in Q1 FY2016, even as the backlog percentage for the quarter was 

extraordinarily low, Marvell’s senior management indicated that the forecasted numbers needed to 

be met and emphasized that “everything and anything needed to be shipped.”  

 

16. By mid-April, several weeks before quarter end, FP&A raised alarm at the growing 

gap between actual revenue and forecasted revenue. As one FP&A employee warned, first quarter 

revenues would be “way off” guidance of $810-$830 million and were likely to be in the $641-

$669 million range, or almost $200 million short of the upper-level guidance. In order to close the 

gap, Marvell again resorted to the use of pull-ins of sales originally scheduled for subsequent 

quarters. The vast majority of the pull-ins were used in the company’s storage segment.   

 

17. Less than two weeks before the quarter ended, Marvell, in the face of the large gap 

between actual and forecasted revenue, made a public announcement reducing its revenue 

guidance for Q1 FY2016. In particular, on April 24, 2015, Marvell announced a revised quarterly 

revenue guidance of $710-$740 million. Internal documents at the time, however, indicated that 

Marvell would need approximately $50 million of pulled-in revenue to meet this reduced public 

revenue guidance. Marvell did not disclose that it would need to pull-in a significant amount of 

revenue from future quarters in order to meet its revised revenue guidance. By not disclosing the 



 

6 

 

pull-ins, Marvell also was able to mask the significant decline in sales and market share it was 

experiencing.     

 

18. In Marvell’s Q1 FY2016, which ended May 2, 2015, Marvell pulled-in $64 million 

of sales scheduled for future quarters, of which $55 million came from the storage segment. 

 

19. On May 21, 2015, Marvell announced it had met its publicly-disclosed guidance, 

with $724 million in total revenues, of which $348 million was storage revenue. Marvell did not 

disclose that it used pull-ins totaling 9% of total revenues and 16% of storage revenues for the 

purpose of meeting the revenue guidance.  The large number of pull-ins masked what would have 

been Marvell missing the low end of its revenue guidance by approximately $30 million and a 

market share loss.  On June 4, 2015, Marvell also filed its Form 10-Q for the First Quarter of Fiscal 

Year 2016 that contained materially misleading information about the company’s first quarter 

revenue performance.  

 

c. Second Quarter of Fiscal Year 2016 (ended August 1, 2015) 
 

20. Several weeks into Q2 FY2016, Marvell’s senior management renewed its pressure 

on its sales managers to pull-in as much revenue as possible to meet the quarter’s revenue targets. 

Internal FP&A analyses reflected that the combination of declining market demand coupled with 

the effects of the prior quarter pull-ins had left the company almost $100 million short of its public 

revenue guidance of $710-$740 million. Again, senior management’s response was that the 

company could simply not afford to miss its revenue guidance. As one Marvell employee 

explained: “[W]e need to pull into this QTR, we are still short, we will worry about next QTR 

later.” 

 

21. In Marvell’s Q2 FY2016, which ended August 1, 2015, Marvell pulled-in a record 

amount of $77 million of sales originally scheduled for future quarters. The pull-ins totaled 11% of 

total revenue for the quarter.  

 

22. Shortly after the end of the quarter, in August 2015, Marvell’s Board of Directors 

first became aware of senior management’s use of pull-ins to meet public revenue guidance. On 

September 11, 2015, Marvell announced a delay in filing its Form 10-Q for Q2 FY2016 and the 

commencement of an internal investigation to examine, among other things, the company’s use of 

pull-ins. Shortly thereafter, Marvell’s independent auditor resigned. 

 

2. The Use of Pull-ins Adversely Impacted Marvell’s Future Revenue 

 

23. Within Marvell, it was understood that pull-ins negatively impacted Marvell’s 

revenue prospects in future quarters. Because Marvell’s customers provided quarterly forecasts, on 

a periodic basis, of how much product they intended to purchase from Marvell, if Marvell 

requested a customer to accept shipment of product earlier than forecast, Marvell could record the 

sale as occurring in the earlier quarter but, all things being equal, would lose that sale in the later 

quarter (when it was previously scheduled). The adverse impact of pull-ins on future quarter 

revenue was particularly pronounced in the declining market during the Relevant Period, as 

Marvell had little hope of generating additional sales in future quarters.  



 

7 

 

 

24. From the outset of the pull-in effort, Marvell’s senior management was warned of 

the consequences of pull-ins on future revenue. In the final days of Q4 FY2015, a senior sales 

manager, who was being pressed to pull-in revenue, warned that the pull-ins would make it all the 

more difficult to meet—in his words, pull-ins would “destroy”— revenue targets for Q1 FY2016. 

Days after the end of the quarter, another senior operations manager warned that the pull-ins “did a 

lot of damage in Q4 and [Marvell could not] be as aggressive [in Q1].” Sales managers also alerted 

senior management that the pull-ins were masking the real cause of Marvell’s revenue problems, 

i.e., declining market conditions. One manager tried to explain that he could not reasonably be 

expected to meet the Q1 FY2016 AOP target set by senior management given the “really weak” 

market conditions.  

 

25. In Q1 FY2016, as FP&A continued to track the growing gap between actual and 

forecasted revenue, at the direction of senior management it pressed sales teams to meet their 

targets. Again, sales teams pushed back, warning that the effects of the Q4 pull-ins plus the 

declining market demand made it all but impossible for the company to meet its revenue targets. 

One senior operations manager noted, approximately mid-way through the quarter: “based on the 

damage we had to create in Q4 in regards to pulls, we started Q1 in the hole with the cabinets left 

pretty bare . . . . We did not empty the cabinets the first month for Q1 of last year like we did this 

time.”  When that same senior operations manager pressed for more pull-ins, a sales employee 

responded: “We have tried our best to pull in. I think it’s not realistic to expect such a huge 

increase of revenue after [huge Q4] pull in . . . . And I strongly suggest not [to] keep pulling in like 

this. It’s too risky.” 

 

26. Even within FP&A, which performed a critical role in assisting senior management 

in implementing the pull-in plan, there came to be a realization that the pull-ins were having 

adverse impacts on future quarter revenue. One mid-level FP&A manager, in considering a sales 

manager’s ability to meet his revenue targets, noted to the head of FP&A: “I personally think it’s a 

miracle that he’s not de-committing on the revenue target given how much we pulled in [in] Q4.” 

 

27. Marvell’s senior management ultimately ignored the warnings and pressed ahead 

with the pull-in effort.  Half way through Q1 FY2016, a senior operations manager reported that 

senior management had “ordered full speed ahead and is pushing everyone to achieve their 

[revenue targets]” and that senior management “is not going to budge from the target” set for Q1. 

The solution, according to the same manager, was to keep pulling-in: “[W]e have to ship anything 

and everything possible.”  

 

28. By the end of Q1 FY2016, and into Q2 FY 2016, Marvell’s continuous pull-in 

effort met increased resistance from its customers, who were starting to carry excess inventory of 

Marvell’s products as a result of the repeated requests to accept early shipments. A senior 

operations manager was told that customers “did not like the snowball effect of the pull-ins and 

holding huge inventories.” Internal analyses within Marvell indicated that the cumulative effects of 

the pull-ins on its customers’ inventory presented risks to Marvell’s future revenue. 

 

3. Marvell Ignored Those who Expressed Concern with the Pull-in Scheme  

 



 

8 

 

29. Several company employees pushed back on Marvell’s reliance on the use of pull-

ins to bridge the gap between actual revenue and publicly-disclosed guidance. These persons, 

however, were ignored.  

 

30. A principal source of opposition to the pull-in plan came from sales managers, who 

were most familiar with their customers’ needs as well as market conditions. Marvell’s senior 

management was warned that the company was facing a substantial decline in market demand that 

rendered the company’s revenue targets unrealistic. As one sales manager explained to a senior 

Marvell executive in the final month of Q1 FY 2016: “Data has been published this morning that 

Q1 shipments [were] down to the lowest level since [. . .] 2001 . . . . There is really weakness in the 

storage industry.” However, when sales managers cautioned that pull-ins were masking declining 

market demand, the response from Marvell’s senior management was to conduct more, not less, 

pull-ins.   

 

31. Additional opposition to Marvell’s pull-in plan came from a senior level Marvell 

employee with responsibilities related to Marvell’s accounting and financial disclosures. During 

April 2015, the employee cautioned certain members of senior management, including the 

president, the CFO, and the head of FP&A, that Marvell’s use of pull-ins could trigger disclosure 

obligations because they could be masking a downturn in the company’s financial results. The 

employee cited prior SEC actions against public companies that had distorted their financial results 

through unusual sales practices. Rather than heed the employee’s warnings, Marvell’s senior 

management did the opposite—the warnings were ignored, and they misled the employee by 

falsely asserting that the pull-ins were not being used primarily or solely to meet revenue guidance. 

At the conclusion of one of the aforementioned discussions, the employee was directed to send an 

e-mail to senior management indicating that there were no issues with the pull-ins. The employee 

sent the e-mail as requested. 

 

4. Marvell Misled Investors by Failing to Disclose the Purpose, Scope, and Effect of the 

Pull-in Transactions 

 

32. As noted above, Marvell reported its financial results for Q4 FY2015 and Q1 

FY2016 in earnings calls and in reports filed with the Commission, without disclosing that a 

significant portion of its revenue had resulted from the use of pull-ins intended to meet the 

company’s public revenue guidance.  

 

33. By failing to disclose this information, Marvell misled investors in the following 

ways. First, investors were left with the misleading impression that Marvell was able to meet its 

public guidance organically, through normal customer demand for its products. Internally, 

however, Marvell closely tracked what it considered to be its natural or organic revenue (without 

the use of pull-ins). Senior management was aware that its natural revenue was far below the 

company’s public guidance, and that this was primarily because of a significant decline in 

customer demand caused by changing market conditions. Without the same information, investors 

lacked an ability to evaluate financial results in context and compare results across periods. 

 

34. In addition, investors were unaware of the adverse impact that pull-ins were having 

on revenue and sales in future quarters. Internally, senior management was fully aware that the 



 

9 

 

pull-ins were simply shifting revenue from one quarter to another, and sales professionals 

repeatedly warned senior management of the “cannibalization” of future revenue, particularly in 

the company’s key storage segment. Senior management was also aware that, in light of the 

deteriorating market conditions, it was highly unlikely that customers would agree to purchase 

products beyond what they had earlier forecasted. Without such information, investors lacked an 

ability to evaluate Marvell’s future revenue and sales prospects and judge the company’s ability to 

meet future guidance. And finally, investors were unaware that the pull-ins were masking declining 

sales and market share. 

 

35. Marvell’s internal disclosure process failed to ensure that it adequately considered 

its disclosure obligations surrounding its use of pull-ins. A key part of the disclosure process was 

the Disclosure Committee. The Disclosure Committee was responsible for, among other things, 

assisting Marvell’s senior management in ensuring the accuracy and timeliness of the company’s 

financial disclosures. During the Relevant Period, the Disclosure Committee met several times, 

including to review and approve the company’s disclosures for Q4 FY2015 and Q1 FY2016. The 

Disclosure Committee was not made aware of, nor did it consider, whether the company’s use of 

pull-ins needed to be disclosed publicly.  

 

36. Marvell’s senior management during the Relevant Period, including its then 

president, CFO and head of FP&A, did not consider or discuss the issue of whether the company 

needed to disclose its use of pull-ins other than during the aforementioned April 2015 meetings 

where they ignored the cautions of a senior level employee.  Senior management also failed to 

ensure that the Disclosure Committee adequately considered the issue. It failed to do so even after 

at least one employee cautioned senior management that Marvell’s use of pull-ins implicated 

disclosure obligations because they were masking declining financial results.  

 

37. Marvell’s Board of Directors was not informed of senior management’s efforts to 

meet publicly-disclosed revenue guidance through the use of pull-ins. On at least two occasions, in 

documents that were to be provided to the Board, references to pull-ins that had existed in earlier 

drafts were deleted. Marvell also did not disclose to its independent auditor that the company had 

attempted to meet its public revenue guidance through the use of pull-ins.  

 

38. Marvell’s misleading statements were material. A reasonable investor, in 

considering whether to purchase or sell Marvell securities, would have found it important that 

Marvell was using pull-ins to generate sales for the purpose of meeting publicly-disclosed revenue 

targets and mask a significant downturn in sales, and that the pull-ins would adversely impact 

future revenue.  

 

5. Marvell’s Employee Stock Purchase Plan 

 

39. As part of its employee compensation, Marvell offered an Employee Stock 

Purchase Plan which allowed certain employees to purchase stock at a discounted price. During the 

Relevant Period, Marvell employees purchased company stock at a cost of approximately $11.88 

per share.  

 

D. Violations 



 

10 

 

 

40. Section 17(a)(2) proscribes obtaining “money or property by means of any untrue 

statement of a material fact or any omission to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading.” 

Section 17(a)(3) proscribes engaging “in any transaction, practice, or course of business which 

operates or would operate as a fraud or deceit upon the purchaser.” A violation of these provisions 

does not require scienter and may rest on a finding of negligence. See Aaron v. SEC, 446 U.S. 680, 

685, 701-02 (1980). Marvell violated the foregoing provisions when it made materially misleading 

public statements and omitted to disclose certain facts regarding its financial results for Q4 

FY2015 and Q1 FY2016, and further engaged in an undisclosed effort to meet public revenue 

guidance through the use of pull-ins.  

 

41. Section 13(a) of the Exchange Act requires issuers such as Marvell to file periodic 

reports with the Commission containing such information as the Commission prescribes by rule. 

Form 10-K and Form 10-Q requires registrants to comply with Regulation S-K Item 303, which 

required Marvell to describe in the MD&A sections of the required periodic filings “any known 

trends or uncertainties that have had or that the registrant reasonably expects will have a material 

… unfavorable impact on net sales or revenues or income from continuing operations.”  The 

failure to provide the information required by Regulation S-K constitutes a violation under Section 

13(a) of the Exchange Act. Marvell used pull-ins to mask declining sales and markets, a trend, 

event, or uncertainty that was known to Marvell and was reasonably likely to have material effects 

on the registrant’s financial condition or results of operations.  Contrary to the requirements of 

Regulation S-K, Marvell failed to disclose the material impact of this known trend, event, or 

uncertainty on current and future revenues within its required MD&A sections of its Form 10-K for 

the fiscal year 2015 and its Form 10-Q for the first quarter of fiscal year 2016. As a consequence, 

Marvell violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13, and 12b-20 

thereunder. 

IV. 

 

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer.  

 

Accordingly, pursuant to Section 8A of the Securities Act and Section 21C of the Exchange 

Act, it is hereby ORDERED that:   

 

A. Marvell shall cease and desist from committing or causing any violations and any 

future violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act and Section 13(a) of the 

Exchange Act and Rules 13a-1, 13a-13, and 12b-20 thereunder. 

 

B. Marvell shall, within 10 days of the entry of this Order, pay a civil penalty in the 

amount of $5,500,000 to the Securities and Exchange Commission for transfer to the general fund 

of the United States Treasury, subject to  Exchange Act Section 21F(g)(3).  If timely payment is 

not made, additional interest shall accrue pursuant to SEC Rule of Practice 600 and 31 U.S.C. 

§3717.  Payment must be made in one of the following ways: 

 



 

11 

 

(1)  Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request; 

 

(2)  Respondent may make direct payment from a bank account via Pay.gov through the 

SEC website at http://www.sec.gov/about/offices/ofm.htm; or 

 

(3)  Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission and 

hand-delivered or mailed to: 

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169  

 

Payments by check or money order must be accompanied by a cover letter identifying Marvell as 

the Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 

letter and check or money order must be sent to Anita Bandy, Associate Director, Division of 

Enforcement, Securities and Exchange Commission, 100 F Street N.E., Washington, DC 20549-

6561A. 

 

 C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding. 

  

 By the Commission. 

 

 

 

 

        Vanessa A. Countryman 

        Secretary