'Responsive submission' sought
In a filing today, the ad-agency holding company said the SEC staff informed Interpublic it intends to seek approval from the commission "to enter into settlement discussions with the company and, failing a settlement, to commence an action charging the company with various violations of the federal securities laws."
Interpublic said the SEC sent it a so-called Wells notice that "invites the company to make a responsive submission before the staff makes a final determination concerning its recommendation to the commission."
"Under recently revised settlement procedures," Interpublic said, "such a notice is now a prerequisite to settlement negotiations with the commission staff."
"Given our understanding of new procedures at the SEC, this development is not unanticipated, and we believe that it moves us a step closer to resolution in this matter," Interpublic Chairman-CEO Michael Roth said in a statement. "We have been cooperating with the commission since the outset of its investigation in 2002, and it is our intention to share our point of view regarding settlement with them. We look forward to a prompt resolution to their deliberations."
At issue are investigations the SEC began after Interpublic restated its financial results in 2002 and 2005 to correct botched accounting. Interpublic's accounting woes came to light five years ago, in August 2002, when the holding company issued a terse press release saying it was postponing release of quarterly earnings "to accommodate the audit committee of the board." Interpublic's stock tumbled on that news and the restatements that followed. Interpublic's stock is still struggling to gain traction. The stock June 12 closed at $11.38, a new low for the year. The stock this morning briefly slumped to $11.28 on the news before rebounding. Late this afternoon, it traded at $11.39, down 8 cents from the June 13 close. Interpublic has been anticipating some financial hit from the SEC inquiry. In its March 2006 10-K filing, Interpublic revealed: "We expect that the investigation will result in monetary liability." In its last May 2007 10-Q filing, Interpublic said: "We expect that the investigation will result in monetary liability, but because the investigation is ongoing, in particular with respect to the 2005 restatement, we cannot reasonably estimate the amount, range of amounts or timing of a resolution. Accordingly, we have not yet established any provision relating to these matters."