NEW YORK - Saks Inc. said on Wednesday that it settled the Securities and Exchange Commission investigation into certain alleged financial reporting violations. The settlement does not include any financial penalty, and there is no admission or denial of any SEC charges. Saks did agree to a permanent injunction against future violations.
The investigation followed the disclosure by the retailer in March 2005 that an internal investigation indicated “improper collections of vendor markdown allowances.” Later that year, when an internal audit was completed in August, Saks said its Saks Fifth Avenue division owed vendors $26 million for markdown allowances during the 1999-2003 fiscal years, and another $8.2 million during the 1996-1998 fiscal years. In addition, vendors were to be paid interest at the rate of 7.25 percent annually, totaling about $14 million for the improperly collected markdown allowances. In total Saks paid $48.2 million back to vendors.
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