Today’s report is in two sections. The first section speaks to investigative records the SEC recently released on now-closed investigations. A list of companies with no signs of recent SEC investigative activity appears in the second half.
Why records and data about SEC investigations that are over can still matter today –
Due to the complexities of accounting rules and legal hurdles that must be overcome to prove fraud, the vast majority of SEC investigations end with “no enforcement action recommended.” While it is true that some SEC investigations truly are of little consequence, we say don’t be one of the dumb-bunnies that automatically takes comfort in such an announcement. We regularly acquire records on closed SEC probes that investors would consider troubling. Some reasons an investigation that recently ended can still hurt you today are:
- Investors never know the full story of what really took place and management has little incentive to tell you as much. But the records we acquire, or even the size of the document set can be meaningful.
- The company could have made accounting and/or disclosure changes they are not telling you about that could adversely impact its ability to deliver on expectations going-forward. Again, the records can help.
Experience has taught us that when mainstream analysts and investors are cheering the end of a known investigation with “no enforcement action recommended,” this can be the time when under-performance commences. Rarely are investors told this is due to SEC pressure. Documents or awareness of closed probes, especially the undisclosed ones, can help you level the playing field.
Companies on Which Records Pertaining to Now-Closed SEC Investigations Were Recently Identified and/or Acquired –
- Comcast Corp. (CMCSA) – Removed from Watch List
- CSX Corp. (CSX)
- Electronic Arts, Inc. (EA)
- Hillenbrand, Inc. (HI) – Removed from Watch List
- INTL FCStone, Inc. (INTL)
- TD Ameritrade Holding Corp. (AMTD) – Removed from Watch List
- Union Pacific Corporation (UNP)
- United Technologies Corporation (UTX)
A short description of what we learned or obtained on each company appears below. Unless stated otherwise, there were no signs of current investigative activity found at the time of the SEC’s response to us. Clients with an interest in any of the documents referenced should contact us for copies.
In addition, today's Mailbox Report lists 54 Companies on which we received information from the SEC to suggest the absence of recent SEC investigative activity
NOTES AND DISCLOSURES
This report provides a summary of relevant data and documents we received in response to Freedom of Information Act (FOIA) requests we filed on this company. If we alert you to existence of an undisclosed SEC probe, that means we filed a FOIA request with the SEC on the company in question and have a response, in black-and-white, on government letterhead that supports our statement. Where history is available, we present it below so you can compare it to company disclosures, where relevant, as well as our most recent data. Other interpretative guidance and disclosures appear below.
To access the full report, click on the PDF (only visible when logged-in).
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.
