Is the Conn’s SEC Probe Hurting Earnings? It May Be a Good Time to Ask.


Conn’s - $CONN

  • On Watch of Companies with Disclosed SEC Probes      
  • Added to Disclosure Games® List

Analyst Summary: From carefully timed delays in initial disclosure of its SEC probe in 2014, to failure to provide meaningful updates today, we think Conn’s is playing Disclosure Games with investors about its SEC probe.  

This isn’t merely another case of us pointing out weak or misleading disclosure practices at a public company.  Since Nov-2014, the SEC has been investigating Conn’s underwriting policies and bad debt provisions.  Only a few weeks ago, challenges on the credit side of Conn’s business were widely blamed as the cause of an earnings disappointment. We believe the Conn’s SEC investigation is formal as well, through in one of its disclosure sleights-of-hand, the company never says that directly.  

Credit losses, underwriting policies and bad debt provisions

live in close proximity when it comes to financial statement impact. Further, management judges the SEC probe in this area to be sufficiently material an exposure to the entire company that it must still be disclosed. The best thing an investor could do right now is try to ascertain why that is.  To our view, investors should now place the burden on Conn’s management to prove SEC pressure is not impacting earnings today.

To access the full report, click on the PDF.

To learn more on our process and what our findings mean, click here.

Notes: The SEC did not disclose the details on investigations referenced above. The SEC reminds us that its assertion of the law enforcement exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security.  New SEC investigative activity could theoretically begin or end after the date covered by this latest information which would not be reflected here.