Office Depot Inc. (ODP) has reached a proposed settlement with the staff of the U.S. Securities and Exchange Commission to resolve issues with respect to contacts and communications with financial analysts, inventory receipt and reserves, timing of vendor payments, certain intercompany loans, certain payments to foreign officials, inventory obsolescence and timing and recognition of vendor program funds.
The SEC had commenced an inquiry in July 2007 and the formal investigation was disclosed in January 2008. Under the proposed settlement, the company, without admitting or denying liability, has agreed to pay a civil penalty and to consent to a cease and desist order pertaining to the maintenance of accurate books and records and internal controls.
The proposed settlement is contingent on the review and approval of final documentation by the company and the SEC staff, and is subject to approval by the SEC Commissioners.
Office Depot said the SEC staff intends to recommend to the SEC a proposed settlement with respect to the company, which would conclude for the company all matters arising from the SEC investigation. Office Depot said the company and its officers and employees cooperated with the SEC staff in this investigation.
The company has also been informed that its CEO and two former employees each received "Wells" notices from the staff of the SEC's Miami Regional Office advising them that the regional staff has made a preliminary decision to recommend that the SEC bring civil enforcement actions against them for possible violations of Regulation FD. Regulation FD is a rule regarding communication with analysts and investors.
Under the processes established by the SEC, these individuals will have an opportunity to present their perspective and to address the issues raised by the SEC staff before any action is taken by the SEC.
ODP closed Friday's regular trade at $6.63, up $0.33 or 5.24%, on 9.94 million shares. The stock dropped $0.20 or 3.02% in the extended trade and was trading at $6.43.
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