Sherilyn McCoy has at least one tiny load off her shoulders at Avon Products Inc.: The Securities and Exchange Commission plans to take no enforcement action against the company in its probe regarding the company’s contacts with Wall Street analysts.
This story first appeared in the September 14, 2012 issue of WWD. Subscribe Today.
In a one-line explanation, Avon said in a regulatory filing Thursday that on Sept. 11 it was advised by the SEC staff that the agency didn’t intend to recommend any enforcement action against the company in connection with the Regulation FD, or fair disclosure, investigation.
A spokeswoman for Avon said, “Our understanding is that the matter is closed.”
Avon still faces a major SEC headache, though, since the agency continues to investigate allegations that the beauty company bribed government officials in China.
Avon disclosed in April 2010 that it suspended four executives in the wake of an internal investigation into alleged bribery in China, and that the probe would widen to include other countries as well. They were fired in May 2011.
The company in June 2008 launched a voluntary probe under the oversight of its audit committee and conducted by external counsel focusing on compliance with the Foreign Corrupt Practices Act. It also voluntarily notified the U.S. Department of Justice and the SEC about the matter. That led to the SEC’s formal investigation.
In October 2011, Avon disclosed that the SEC had issued a subpoena regarding information in connection with the Regulation FD probe, this time about its contacts and conversations with certain financial analysts and other representatives of the financial community during 2010 and 2011. That disclosure represented the second SEC probe into the company’s activities, which also has been closed.
The alleged wrongdoing occurred under the leadership of Andrea Jung, who was at the time chairman and chief executive officer.
Jung has since passed the ceo baton to McCoy, who joined the company on April 23 from Johnson & Johnson. Jung remains executive chairman.
Also losing out was Charles Cramb, vice chairman of developed markets, who was fired in February. Cramb was a top-ranking executive and the right-hand man to Jung.
It’s been a tumultuous time for Avon, although the company did manage to stave off a $10 billion takeover offer from Coty Inc. in April. Coty in turn went to plan B with news of an initial public offering slated for fall, which earlier this week was pushed back to next year.
During McCoy’s first 100 days at Avon, she outlined five key priorities to fix the business: Stabilize top-line growth; improve income; invest in employees and build a culture of accountability; focus on technology to simplify selling for representatives, and build a strategic road map to define Avon’s future. Although a strategy is in place, she still has a tough job ahead.
Shares of Avon closed up 3.5 percent to $16.28 in trading Thursday on the New York Stock Exchange. News of the SEC filing came at 5:05 p.m., after the markets closed. Shares of Avon remained unchanged at 6 p.m., with no activity in after-hours trading.