Probes Reporter Research Update - November 20, 2018

Probes Reporter® Data Feed

Watch List Activity – New Data Suggests SEC Probes May Still be Ongoing

In those instances noted below, the SEC has again cited the "law enforcement exemption" of the Freedom of Information Act (FOIA) as basis to block our access to the detailed records on the public companies included in this update. As a matter of law, they are acknowledging some sort of investigative activity.

These are companies on which SEC appeal responses had previously confirmed enforcement proceedings as ongoing.  The dates of earlier confirmation are noted below.  At the time, those SEC investigations were not disclosed, which caused us to place/maintain the related companies on our Watch List of companies with undisclosed SEC investigations.

Full SEC investigative histories on each of the following companies have been previously published and are available at the Probes Reporter website.  These data are incremental to those reports.

We caution investors that these latest SEC responses have not yet been confirmed through the SEC’s FOIA appeal process as was done previously.  You should allow that the results of a new appeal could reveal information possibly inconsistent with this latest information. Today’s report merely represents incremental information we thought important to bring to your attention while we await the results of our appeal.   As soon as we have that appeal response, we will publish it and issue a fully updated SEC Investigative Update report on the related company.

Company Comments in today’s research update –

• Automated Data Processing, Inc. – ADP:  Removed from Watch List. 
• Crane Co. – CR:  Removed from Watch List. 
• Exxon Mobil Corporation – XOM:  Removed from Watch List.
• FTI Consulting, Inc. – FCN:  Warning Suspended. 
• Insight Enterprises, Inc. – NSIT: Removed from Watch List.
• Insys Therapeutics, Inc. – INSY:  Removed from Watch List.
• Natera, Inc. – NTRA:   Removed from Watch List. 
• New Senior Investment Group Inc. – SNR:  Removed from Watch List. 
• News Corporation – NWSA: Removed from Watch List.
• Oracle Corporation  – ORCL:     Removed from Watch List. 
• Prospect Capital Corp. – PSEC:  Removed from Watch List.
• Rexnord Corp. – RXN:  Removed from Watch List. 
• Ryman Hospitality Properties, Inc. – RHP:  Removed from Watch List.
• Signet Jewelers Limited – SIG: Removed from Watch List. 
• Sterling Construction Co, Inc. – STRL:     Warning Suspended. 
• Stryker, Inc. – SYK:      Removed from Watch List.
• SunPower Corporation – SPWR:  Warning Suspended. 
• Sunrun, Inc – RUN:  Warning Suspended. 
• TerraForm Power, Inc. – TERP: Removed from Watch List.
• Under Armour, Inc. – UA:          Warning Suspended. 
• United Parcel Service, Inc. – UPS:  Removed from Watch List.

Company Comments

Automated Data Processing, Inc. – ADP:  Removed from Watch List. A recent response tells us an undisclosed SEC investigation has ended.  We don’t yet know what it was about or if it would matter to investors as the file has been remanded for further processing.  In the research history, the first response indicating an SEC investigation was dated 02-Feb-2018, and later confirmed on 16-Mar-2018. This was a change from a response dated 23-Feb-2017, at which time no signs of recent SEC investigative activity were found.   Click here for our SEC Investigation Update of 18-Apr-2018.

Crane Co. – CR:    Removed from Watch List.  We recently received 16 pages from a 2017-18 SEC investigation of Crane, which ended in Mar-2018. Unfortunately, the documents we received are of little analytical value. We have no other documents or information that would help the investor gauge the timing, duration, or scale of this now closed matter of Crane Co.  In our research history, the first response indicating an SEC probe was dated 10-May-2017. Ongoing enforcement proceedings confirmed two times prior to our latest response received in late Sep-2018.   (Crane Document Excerpt Above)

Exxon Mobil Corporation – XOM:  Removed from Watch List.  A recent response tells us an undisclosed SEC investigation has ended.  We don’t yet know what it was about or if it would matter to investors as the file has been remanded for further processing.  In the research history we found at least two SEC probes since Jul-2012.  First response indicating the most recent SEC probe was dated 25-Jul-2016.  Since we first published these findings on 06-Sep-2016, word of an SEC probe received wide media attention. Even though confirmed three times, it remained undisclosed by Exxon.

FTI Consulting, Inc. – FCN: Warning of an undisclosed SEC investigation suspended pending more data.  We are placing a SUSPEND on the warning here due to a recent response from the SEC which is inconsistent with earlier responses.  We will update when results of an appeal are received. The first response indicating an SEC investigation was dated 05-Mar-2018, and later confirmed on 20-Apr-2018. This is a change from a response dated 27-Apr-2017, at which time no signs of recent SEC investigative activity were found.

Insight Enterprises, Inc. – NSIT: Removed from Watch List.  A recent response tells us an undisclosed SEC investigation has ended.  We don’t yet know what it was about or if it would matter to investors as the file has been remanded for further processing.  The first response indicating an SEC investigation was dated 22-Nov-2017, and later confirmed on 12-Jan- 2018.

Insys Therapeutics, Inc. – INSY:  Removed from Watch List.  In an 8-K filed 05-Nov-2018, INSY said the SEC concluded an investigation.  It involved a restatement.  The first response indicating an SEC investigation was dated 26-Dec-2017, and later confirmed on 30-Jan-2018. The company did not disclose until after our warning.

Natera, Inc. – NTRA:  Removed from Watch List.  In late Sep-2018, we received 10 pages of records from an SEC probe of Natera that ran from 2016 and ended Feb-2018.  These documents are analytically-rich for those with an interest in this company.   The first response indicating an SEC investigation was dated 22-Jan-2018, and later confirmed on 09-Feb-2018.  An excerpt appears below.

New Senior Investment Group Inc. – SNR:  Removed from Watch List.  In Oct-2018, the SEC released 286 pages of documents involving SNR and Fortress Investments.  They are mostly heavily-redacted and analytically meaningless email exchanges between attorneys.  First response indicating an SEC probe was dated 15-Nov-2016. Ongoing enforcement proceedings confirmed two times since. In the history we also have documents on a massive and undisclosed 2015-16 SEC investigation of Fortress Investment Group (FIG) and New Media Investment Group (NEWM), both affiliates.

News Corporation – NWSA: Removed from Watch List. In Oct-2018, the SEC released 66 pages of a 2017-2018 investigation focused on internal controls and payments made by the Fox News Network.  First response indicating an SEC probe was dated 21-Sep-2017, which was confirmed on 16-Oct-2017.  An excerpt appears below.

Oracle Corporation  – ORCL:     Removed from Watch List.  In late Sep-2018, we learned there are 151 pages of documents available to us on a closed probe of Oracle.  Once we get them, we will follow-up.  We have consistently and repeatedly tracked undisclosed SEC investigative activity at Oracle since Nov-2012.  In Jun-2016, shares fell on news Oracle was hit with a whistleblower lawsuit over cloud accounting. This could easily have triggered yet another SEC investigation.  We have docs on one SEC probe into Oracle that ended Jan-2016 and an earlier matter into Acme Packet (acquired by ORCL in Feb-2013) that ended in Jul-2014.

Prospect Capital Corp. – PSEC:  Removed from Watch List.  Involvement in a previously undisclosed SEC investigation now appears over – Documents Received.  There’s a lot to dig into here.  Give us time, new report forthcoming.

Rexnord Corp. – RXN:  Removed from Watch List.  We learned Rexnord was one of many companies named in an Aug-2016 SEC investigation titled, "Certain non-GAAP Financial Measure Disclosure Deficiencies".  We only have three uninteresting pages of related documents.  No other signs of ongoing investigative activity were found.  First response indicating an SEC investigation was dated 16-Nov-2016. Ongoing enforcement proceedings confirmed three times since. 

Ryman Hospitality Properties, Inc. – RHP:  Removed from Watch List. We learned Ryman Hospitality was one of many companies named in an Aug-2016 SEC investigation titled, "Certain non-GAAP Financial Measure Disclosure Deficiencies"  We have 19 pages of related documents (excerpt below). First response indicating an SEC probe was dated 18-Oct-2016. Ongoing enforcement proceedings confirmed three times since.

Signet Jewelers Limited – SIG:   Removed from Watch List.  After some confusing back-and-forth, by late Oct-2018, the SEC told us it identified 3 pages of records from a now-closed investigation.  But our access to them was blocked in full, with no related documents released on this closed investigation.  The first response indicating an SEC investigation was dated 04-Apr-2017. Ongoing enforcement proceedings confirmed two times since.

Sterling Construction Co, Inc. – STRL:    Warning of an undisclosed SEC investigation suspended pending more data.  We are placing a SUSPEND on the warning here due to a recent response from the SEC which is inconsistent with earlier responses.  We will update when results of an appeal are received.  First response indicating an SEC probe was dated 16-May-2017. On-going enforcement proceedings confirmed two times since.

Stryker, Inc. – SYK:  Removed from Watch List.  In Sep-2018, the SEC charged Stryker with violations of the FCPA.  Prior to this, the first response indicating an SEC investigation was dated 05-Feb-2018, and later confirmed on 16-Mar-2018.  Cautionary Note:  We found Stryker has a horrible record of disclosing SEC investigations and plays Disclosure Games® when they do so. 

SunPower Corporation – SPWR and
Sunrun, Inc – RUN:  Warnings of undisclosed SEC investigations suspended pending more data.  We are placing a SUSPEND on the warnings on SunPower Corporation and Sunrun, Inc. due to a recent response from the SEC which is confusing and difficult to accurately interpret.  We will update when results of an appeal are received.

TerraForm Power, Inc. – TERP:    Removed from Watch List. An Oct-2018 response tells us an undisclosed SEC investigation has ended - File has been remanded for further processing. First response indicating an SEC probe was dated 11-Feb-2016.  Ongoing enforcement proceedings were confirmed four times since, most recently on 28-Mar-2018. Our research shows TerraForm Power, a “yieldco” of SunEdison, was already under investigation by the SEC prior to SunEdison announcing its own woes at the end of Mar-2016.

Under Armour, Inc. – UA:  Warning of an undisclosed SEC investigation suspended pending more data.  We are placing a SUSPEND on the warning here due to a recent response from the SEC which is inconsistent with earlier responses.  We will update when results of an appeal are received.  First response indicating an SEC probe was dated 05-Jul-2017.  On-going enforcement proceedings confirmed two times since.  Appeal in-process as of Nov-2018.

United Parcel Service, Inc. – UPS:  Removed from Watch List.  We were early and accurate in warning you about what turned out to be UPS’s involvement in the SEC’s far-reaching investigations into the use of non-GAAP metrics.  Those with an interest in this company need to be aware we’ve found evidence of multiple undisclosed SEC probes in recent years.  United Parcel Service now off the Watch List. 

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

Disclosure Games® is a term we use to highlight those public companies engaging in disclosure practices that in our opinion may be misleading, confusing, evasive, or otherwise lacking the transparency needed for investors to make well-informed investment decisions regarding a potentially material exposure.