L90 Removes CFO, Calls Off Merger

Weeks after the Securities and Exchange Commission launched an investigation into L90 Inc., the Marina del Rey-based online marketer said Monday that it removed its top financial officer and ended a pending merger with entertainment firm EUniverse Inc.

Chief Financial Officer Thomas Sebastian has been placed on administrative leave, and Chief Executive and President John Bohan has resigned.

Mitchell Cannold, former chief operating officer of the Web site Space.com, will replace Bohan.

EUniverse announced in early January that it would acquire L90, and expected the cash deal to be worth as much as $55 million.

The deal, designed to help EUniverse expand its audience in a tightening Internet advertising market, was put on hold when L90 disclosed last month the SEC had issued subpoenas to the company and at least one of its board members.

The two companies will continue to negotiate a cash reimbursement by L90 to cover pre-merger expenses.

“We couldn’t reasonably predict when the investigation would end,” said EUniverse CEO Brad Greenspan. “We made a mutual decision to terminate the existing merger agreement.”

L90 executives declined to comment.

Company sources who have seen the SEC subpoenas, however, said federal investigators are looking into how L90 structured its advertising deals, as well as how the company recognized certain revenue on its balance sheets.

SEC officials declined to comment.

Monday’s news comes only days after company co-founder Mark Roah resigned from the company’s board, citing personal reasons.

Trading in L90 shares was halted Monday before the market opened. On Friday, the stock closed at $1.21 on Nasdaq.