SEC Considers SoundScan Manipulation Investigation

The Securities and Exchange Commission is looking into claims by a former EMI employee that the major label has attempted to manipulate Nielsen SoundScan data, according to a published report.

No formal investigation has been opened. The SEC is said to be in the midst of collecting documents relating to the allegations.

EMI maintains that the allegations are false. The major says it has not been contacted by the SEC in regards to the matter.

As previously reported, California State Senator Kevin Murray also is investigating the claims.

Gene Rumsey, an ex-EMI Music Distribution executive VP, reportedly testified in a sworn deposition last December that EMI hired marketing consultants who would trade free goods with retailers in exchange for additional scans of an album. Rumsey, who left the company two years ago and now works for Concord Records, estimated that the practice occurred on less than 10% of EMI releases, according to reports.

Nielsen SoundScan says that its results can not be manipulated by such practices. The company has multiple levels of safeguards designed to catch any attempts that might be made to skew sales results.

Rumsey's testimony was part of a lawsuit between EMI and Avatar Records, an indie label previously distributed by EMI. EMI sued Avatar for breach of contract last April, claiming the indie owes them $1 million.