NEW YORK — Spiegel Inc. on Friday entered into a consent decree with the Securities and Exchange Commission that, among other conditions, requires the appointment of an independent auditor to review the firm’s financial records going back...
NEW YORK — Spiegel Inc. on Friday entered into a consent decree with the Securities and Exchange Commission that, among other conditions, requires the appointment of an independent auditor to review the firm’s financial records going back to the start of 2000.
The SEC sued Spiegel in a Chicago federal district court for failure to disclose material information about its ability to continue operating its business.
The SEC investigation is ongoing, according to the regulatory agency. Spiegel said in a statement that it is "cooperating fully" with the investigation.
The civil lawsuit charged Spiegel with withholding information it received from its independent auditor over Spiegel’s ability to continue as a "going concern." The court document said a subsequent proposed auditor report stated the audit firm had "substantial doubts" about Spiegel in light of certain financial issues. Spiegel, the SEC said, chose to "conceal" the "going concern" issue by filing notices of late filings for its annual and quarterly reports on the grounds that various lending agreements were not in place.
While the consent agreement partially resolved some of the SEC’s allegations, it also mandated that Spiegel agree to the appointment of an examiner to protect the interests of minority shareholders. The examiner’s role will be to review Spiegel’s financial records and provide a report within 120 days. The report will address Spiegel’s financial condition and identify any material accounting irregularities.
The SEC reserved its right to seek civil penalties, among other remedies.
As reported, Spiegel in the last month appointed William Kosturos, managing director at the turnaround firm Alvarez & Marsal, as chief restructuring officer and interim chief executive officer. In the latter post, he succeeded Martin Zaepfel at the firm, which is controlled by German catalog giant Otto Versand GmbH.
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