NEW YORK — Saks Inc. settled charges by the Securities and Exchange Commission on Wednesday over 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, according to Saks and the SEC.
Simultaneously with Saks' consent to a final judgment against the company, the SEC had filed a lawsuit against Saks in U.S. District Court in Manhattan.
The settlement follows a disclosure by the retailer in March 2005 that an internal investigation found "improper collections of vendor markdown allowances" at its Saks Fifth Avenue division.
Part of the fallout from the disclosure, in addition to the SEC probe, was an investigation by the U.S. Attorney's Office in Manhattan. An attorney not connected with the government, but familiar with the background of the probe, said Wednesday that he believes that the U.S. Attorney's investigation is continuing. A spokeswoman for the U.S. Attorney's Office declined comment. A spokeswoman for Saks could not be reached for comment.
Saks has said repeatedly that the company has "cooperated" with both governmental investigations.
Saks' disclosure also spawned a lawsuit by International Design Concepts Inc. against Saks and SFA over allegedly improper vendor allowances in May 2005. IDC is the assignee of assets of Apparel Group International, the licensee of Oscar de la Renta for the "Oscar de la Renta" trademarks that AGI used in connection with the women's sportswear bridge collection at SFA. AGI is no longer in operation, according to court papers filed in the 2005 lawsuit, which alleged that it was "forced out of business by the actions of the Saks defendants."
Donald Kreindler of Phillips Nizer LLP, attorney for IDC, said he was "not at all surprised" by the SEC lawsuit against Saks. Meanwhile, the IDC lawsuit "may come up for trial as early as November," Kreindler said.
A separate lawsuit against Saks by Onward Kashiyama, involving markdowns and also filed in 2005, has been settled.
When an internal audit was completed in August 2005, Saks said its SFA division, known as Saks Fifth Avenue Enterprises, 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.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"