Disclosure Insight® reports provide commentary and analysis on public company interactions with investors and with the SEC. They are heavily reliant on our expertise in using the Freedom of Information Act.

Summary and Opinion:  Removed from Watch List – but the danger is particularly high now.  In Aug-2018, we first warned clients about an undisclosed SEC investigation at Healthcare Services Group; see our report published in Aug-2018.  A surprise disclosure in early March (excerpts cited in the full report), now tells us the investigation started much earlier, in Nov-2017.  We also see it became formal by Mar-2018, with at least one subpoena sent to the company by then.  Yet this was still not disclosed.

This is a company where management, for 15 months, felt the risk from its SEC investigation was not sufficiently material to require disclosure.  Now they do.  Why?  What Changed?

This exposure is now viewed by management as so material a risk to the company it just had to be disclosed.  More troubling, however, are the disclosures regarding a related internal investigation.  We present the fact pattern related to this SEC investigation, the internal investigation, and explain why we say it does not add up.

– John P. Gavin, CFA

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Notes:   New SEC investigative activity could theoretically begin or end after the date covered by this latest information which would not be reflected here.  Our Disclosure Insight® reports, like those coming from other financial news and data providers, provide the investing public with commentary and analysis on public company interactions between investors and/or with the SEC and other agencies. They are journalistically based in large part on our expertise with federal filings using the Freedom of Information Act.