Inside today’s research update –
In today’s report you’ll find comments on 8 companies, all of which were/are on our Watch List of companies with undisclosed SEC investigations.
| Erie Indemnity Company | ERIE |
| FTI Consulting, Inc. | FCN |
| Harley-Davidson, Inc. | HOG |
| Healthcare Services Group, Inc. | HCSG |
| J&J Snack Foods Corp. | JJSF |
| Medidata Solutions, Inc. | MDSO |
| Skyworks Solutions Inc. | SWKS |
| Tesla Motors, Inc. | TSLA |
Company Comments, Data, or Perspectives
Erie Indemnity Company – ERIE: Removed from Watch List. In Feb-2019, the SEC released 34 pages of analytically-rich documents from a formal SEC investigation of ERIE that ended in Jun-2018. Those with an interest in this company will find this material helpful. The SEC blocked our access to “9 pages of records consist of opening narratives and a case closing recommendation.” Seeing no other signs of recent SEC investigative activity, we are removing ERIE from our Watch List. The first response indicating SEC investigation was dated 07-Nov-2016. On-going enforcement proceedings confirmed three times since.
FTI Consulting, Inc. – FCN: We placed a SUSPEND on the warning here due to a recent response from the SEC which is inconsistent with earlier responses. We will update when result of an appeal is received. The first response indicating an SEC investigation was dated 05-Mar-2018, and later confirmed on 20-Apr-2018. This was a change from a response dated 27-Apr-2017, at which time no signs of recent SEC investigative activity were found. Appeal in-process as of Nov-2018.
Harley-Davidson, Inc. – HOG: We placed a SUSPEND on the warning here due to a recent response from the SEC which is inconsistent with earlier responses. We will update when result of an appeal is received. The first response indicating an SEC investigation was dated 09-Apr-2018, and later confirmed on 15-May-2018. This was a change from a response dated 14-Apr-2017, at which time no signs of recent SEC investigative activity were found.
Healthcare Services Group, Inc. – HCSG: Removed from Watch List due to disclosure of an SEC investigation – but the danger is particularly high now. On 04-Mar-2019, HCSG first disclosed an SEC investigation it said got started in Nov-2017. We were ahead on this, having first warned clients about an undisclosed SEC investigation in Aug-2018. We will publish a separate Disclosure Insight® report on this company later this week.
J&J Snack Foods Corp. – JJSF: We placed a SUSPEND on the warning here due to a recent response from the SEC which is inconsistent with earlier responses. We will update when result of an appeal is received. The first response indicating an SEC investigation was dated 24-Jan-2018. We received the same response on 18-Jun-2018, which was then confirmed on 11-Jul-2018. This is a change from a response dated 13-Feb-2017, at which time no signs of recent SEC investigative activity were found.
Medidata Solutions, Inc. – MDSO: Removed from Watch List. Since an SEC investigation last disclosed in a 10-K filed in Feb-2017, we have twice received responses from the SEC that confirmed enforcement proceedings remained ongoing, once in Dec-2017, and again on 14-Aug-2018. In the past we wondered aloud whether that older exposure was lingering. Documents released in Feb-2019, appear to confirm our suspicions. Specifically, the SEC released three pages of records that show MDSO was under investigation from the SEC from Nov-2015 to Nov-2018. This is troubling as, again, earlier disclosures did not give that impression. The SEC blocked our access to “… a 6 page case closing recommendation in full”. Seeing no other signs of recent SEC investigative activity, we are removing MDSO from our Watch List.
Skyworks Solutions Inc. – SWKS: Removed from Watch List. In Feb-2019, the SEC released just one page of records from an investigation that ended in 2017. It is not analytically helpful. In addition, the SEC blocked our access to “… a 6 page case closing recommendation in full.” The fact the SEC took 6 pages of narrative to describe what took place in this now-closed investigation suggests it was potentially complex. Seeing no other signs of recent SEC investigative activity, we are removing SWKS from our Watch List. The first response indicating an SEC investigation was dated 24-May-2018, and later confirmed on 06-Jul-2018.
Tesla Motors, Inc. – TSLA: Removed from Watch List. In Nov-2018, Tesla said the SEC and DOJ were investigating Model 3 production targets. We’ve repeatedly warned of undisclosed SEC investigative activity at Tesla. We kept it on the Watch List based on earlier SEC responses that suggested there was more than one undisclosed SEC probe. However, due to a processing error at the SEC, just last week (late February) we received a response from the SEC originally dated Aug-2018. Between news of SEC/DOJ activity and now the SEC processing error, our data is no longer clean enough to keep Tesla on our Watch List. Still, given the history, we are confident is recommending those with an interest proceed with due caution.
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