Comments/Updates on Disclosed SEC Investigative Activity
Logitech International SA (LOGI): No Meaningful Updates From Company on a Disclosed & Protracted SEC Investigation. Protracted SEC probes, especially those with long look-back periods as is the case here, can be particularly hazardous to investors. We recommend avoiding situations like this until at least a year has passed from the investigation ending.
Here's what the company disclosed:
From the Logitech 10-Q filed 27-Jan-2015, for the period ended 31-Dec-2014 --
The Company is subject to an ongoing formal investigation by the SEC, relating to certain issues including the accounting for Revenue inventory valuation reserves that resulted in the restatement described in the Fiscal 2014 Form 10-K, revision to the Company’s financial statements concerning warranty accruals and amortization of intangible assets presented in the Company’s Form 10-K/A, filed on August 7, 2013, and the Company’s transactions with a distributor for Fiscal Year 2007 through Fiscal Year 2009. The Company is cooperating with the SEC in its ongoing investigation. The Company has entered into an agreement with the SEC to extend the statute of limitations. The Company cannot predict the outcome of the investigation at this time and any potential fines or penalties, if any, that may arise from the investigation are currently not estimable.
Lather, rinse, repeat. The company said the exact same thing in the 10-Q filed on 26-Nov-2014. Only a day earlier the company had filed an 8-K announcing receipt of a delisting notification from the Nasdaq. From an 8-K filed 25-Nov-2014 --
Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
On November 19, 2014, Logitech International S.A. (“Logitech” or the “Company”) received a notification from the Nasdaq Stock Market LLC (“Nasdaq”) as a result of the Company’s failure to file the Company’s Quarterly Report on Form 10-Q for the fiscal period ended September 30, 2014 (the “Second Quarter Fiscal Year 2015 Form 10-Q”) as required under Nasdaq’s Listing Rule 5250(c)(1). As previously disclosed, Nasdaq has granted an exception to Nasdaq Listing Rule 5250(c)(1), extending the deadline for the Company to file all delinquent periodic reports until November 26, 2014. That extension also applies to the Second Quarter Fiscal Year 2015 Form 10-Q. The Company expects to file the Second Quarter Fiscal Year 2015 Form 10-Q by that deadline.
From the NT 10-Q filed on 24-Jul-2014:
As previously disclosed, the Audit Committee of the Company (the “Audit Committee”), with the assistance of independent advisors, is conducting an independent investigation of certain accounting matters related to the Company’s previously issued financial statements. Some of the issues being reviewed by the Audit Committee are also the subject of an ongoing formal investigation by the Securities and Exchange Commission (the “SEC”), including the revision to the Company’s financial statements concerning warranty accruals and amortization of intangible assets presented in its Amended Annual Report on Form 10-K/A, filed on August 7, 2013, and the Company’s transactions with a distributor for Fiscal Year 2007 through Fiscal Year 2009. Logitech cannot predict the outcome of the investigation at this time.
From the NT 10-K filed on 22-May-2014 (The company also filed an 8-K on this date with a Press Release disclosing similar information):
The Audit Committee of the Company (the “Audit Committee”), with the assistance of independent advisors, is conducting an independent investigation of certain accounting matters related to the Company’s previously issued financial statements. Some of the issues being reviewed by the Audit Committee are also the subject of an ongoing formal investigation by the Securities and Exchange Commission (the “SEC”), including the revision to the Company’s financial statements concerning warranty accruals and amortization of intangible assets presented in its Form 10-K/A, filed on August 7, 2013, and the Company’s transactions with a distributor for Fiscal Year 2007 through Fiscal Year 2009. The Company is cooperating with the SEC in its ongoing investigation. Logitech recently entered into an agreement with the SEC to extend the statute of limitations and cannot predict the outcome of the investigation at this time.
Our Most Recent Research: In a letter dated 07-Jan-2015, we received information from the SEC suggesting this company was involved in unspecified SEC investigative activity. As a matter of law, the SEC was acknowledging some sort of investigative activity. We filed an administrative appeal to challenge this denial. In our experience, about two-thirds of these SEC responses are confirmed on appeal. Based on what's been disclosed, we expect this will be one of them.
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.
