SAN FRANCISCO (Reuters) – Silicon Valley software startup Zenefits and its co-founder Parker Conrad have been fined nearly $1 million by the U.S. Securities and Exchange Commission as part of a settlement over charges that they had misled investors.

Business software firm Zenefits will pay a $430,000 penalty and Conrad, who resigned as chief executive from the company in early 2016, has been fined more than $533,000.

Zenefits and Conrad consented to the SEC’s order without admitting or denying the findings that they violated the federal securities laws.

“I‘m pleased to have reached an agreement with the SEC regarding Zenefits, and I‘m incredibly proud of what we built there and grateful to have worked with such a talented group of people,” said Conrad, who has since founded a new software startup, Rippling.

The SEC found that Zenefits made “false and misleading statements and omissions” to company investors by failing to disclose that it was not compliant with state insurance regulations. Zenefits employees had sold health insurance without proper licensing, the company said, a violation that led to fines from several states.

Zenefits provides software for businesses to automate their human resources services, including payroll, stock options, maternity leave and vacation time. It previously made money by acting as a health insurance broker, although last month announced it had scrapped that business and changed its revenue model.

“This settlement closes the chapter on a journey we began 18 months ago to transform Zenefits through new values and leadership,” said Josh Stein, general counsel at Zenefits.

Zenefits has raised more than $580 million and last year, in a concession to investors, slashed its valuation by more than half to $2 billion from $4.5 billion.