Summary

The audit committee investigation disclosed by Symantec left out enough details to suggest management is either misleading investors or has no idea of the scope of the exposure.

To us, it also appears the company characterized related SEC contact in a manner that amounts to what we call a stealth disclosure of an SEC probe.

Our research suggests the SEC was already investigating Symantec as early as 17-Apr-2018.

Probes Reporter's Disclosure Insight reports provide commentary and analysis on public company interactions with investors and with the SEC. They are heavily reliant on our expertise in using the Freedom of Information Act. This report was originally published and sent to our subscribers on 14-May-2018.

Summary and Opinion : The audit committee investigation disclosed by Symantec ( Fashion Style Sale Online Ebay Online Short Shirt Sleeve Mens Pierre Fashion Cardin Best For Sale Shopping Online Sale Online XPqV3
) last week left out a number of important details that signal to us the management is either misleading investors or has no idea of the scope and nature of an accounting problem serious enough to delay a 10-K filing. Neither option is good for investors. Ducking analyst questions makes it worse.

Getxo Hoody Firetrap Mens How Much Online Cheap Discount Sale Perfect Sale Online Buy Cheap 2018 Unisex Cheap Professional tVF6rs The fact the management chose to not provide even basic information about this exposure in their related disclosures is bad on its own. To us, it also appears the company characterized related SEC contact in a manner that amounts to what we call a stealth disclosure of an SEC probe; that is, the company felt compelled to mention SEC contact, they just don’t want you to recognize they are actually being investigated by the SEC. We call that a Disclosure Game when it occurs, and we will present why we think that’s what took place here.

Added to the mix is that our research suggests the SEC was already investigating Symantec as early as 17-Apr-2018 (appeal confirmation pending, but more likely now given company disclosures).

We break it down, with individual sections of the disclosure highlighted and interpreted for you below.

From the Symantec 8-K filed 10-May-2018 –

Audit Committee Investigation: Firetrap Getxo Hoody Mens Buy Cheap 2018 Unisex How Much Online Sale Get Authentic U3qD93 The Audit Committee of the Board of Directors has commenced an internal investigation in connection with concerns raised by a former employee . The Audit Committee has retained independent counsel and other advisors to assist it in its investigation. The Company has voluntarily contacted the Securities and Exchange Commission to advise it that an internal investigation is underway, and the Audit Committee intends to provide additional information to the SEC as the investigation proceeds. The investigation is in its early stages and the Company cannot predict the duration or outcome of the investigation. The Company’s financial results and guidance may be subject to change based on the outcome of the Audit Committee investigation. It is unlikely that the investigation will be completed in time for the Company to file its annual report on Form 10-K for the fiscal year ended March 30, 2018 in a timely manner.

Our Take : When you hear the term ‘concerns raised by a former employee’, one of your first thoughts should be to wonder if there is/was a whistleblower. It is important to know who that person was in terms of title, access, and/or knowledge. A former employee, feeling wronged, could have easily gone to the SEC on the hopes of 1) settling a score, and/or, 2) nabbing one of those big fat rewards for doing so. If true, that also raises the prospect the SEC went to Symantec after being tipped-off, asking for voluntary cooperation as part of an informal inquiry.

Follow-up Questions for Symantec Management:

  • What is the nature of the ‘concerns’ raised by this former employee?
  • When did you first learn of the issues raised by your former employee – and how did you first learn?
  • What was the level of responsibility and knowledge of this former employee?

The company can easily answer the above questions without compromising on personal privacy.

From the Symantec 8-K filed 10-May-2018 –

The Audit Committee of the Board of Directors has commenced an internal investigation in connection with concerns raised by a former employee. The Audit Committee has retained independent counsel and other advisors to assist it in its investigation. The Company has voluntarily contacted the Securities and Exchange Commission to advise it that an internal investigation is underway , and the Audit Committee intends to provide additional information to the SEC as the investigation proceeds …

Our Take : This is where it appears to us that Symantec wants you to believe they ‘voluntarily’ contacted the SEC first – all on their own – as a result of these ‘concerns’ raised by a former employee. While this is indeed possible, we do need to challenge this framing of the matter: First, with data from our own research library and, second, by sharing our understanding of how the SEC investigative process works.

Again, we have a response from the SEC dated 17-Apr-2018, in which the SEC blocked our access to records on Symantec over concern their release could potentially interfere with law enforcement proceedings. This suggests the SEC was already investigating the company about a month ago.

Because of this, it’s important to visit upon some ways the expression “voluntarily contacted the SEC” could be interpreted.

One interpretation, and the one we think the company prefers you to make, is that the company went to the SEC first, all on its own, ‘voluntarily’. Had the company gone to the SEC and self-reported this matter, they could have easily said as much. It makes a company look good in the face of adversity. That didn’t happen here.

An alternative interpretation is the SEC contacted Symantec and asked for it to ‘voluntarily’ produce certain information as part of an informal inquiry. That’s how the process involving informal SEC inquiries works and it’s what we think likely happened here.

To say Symantec ‘has voluntarily contacted the’ SEC as stated, is not technically a lie. It becomes misleading, in our view, when a company does not also inform investors this was done after having received a request for voluntary cooperation with an informal SEC inquiry.

Follow-up Questions for Symantec Management:

  • At what point did your internal investigation start?
  • When, exactly, was the company’s first contact with the SEC over this matter?
  • Did you contact the SEC first, or did they contact you?
  • Has the SEC’s Division of Enforcement informed you it was conducting any sort of inquiry over this matter? If so, when did they first contact you?
  • When was your last contact with the SEC over this matter?
  • Have subpoenas been received? (If so, this indicates the investigation has become formal. But be careful as it is false comfort to assume that just because a probe is informal it poses little risk. Both informal and formal SEC investigations can have serious consequences for a company.)
  • Mens Getxo Hoody Firetrap Shop For Cheap Online Buy Cheap 2018 Unisex Cheap Discount Sale Sale Get Authentic tHnrLyx Where does stand with the SEC? For example, has anyone connected to Symantec been asked to provide testimony related to this matter?

From the Symantec 8-K filed 10-May-2018 –

The investigation is in its early stages and the Company cannot predict the duration or outcome of the investigation. The Company’s financial results and guidance may be subject to change based on the outcome of the Audit Committee investigation. It is unlikely that the investigation will be completed in time for the Company to file its annual report on Form 10-K for the fiscal year ended March 30, 2018 in a timely manner .

Our Take : An internal investigation serious enough to delay a 10-K holds potential for grave consequences for investors over the near-term. Restatements and significant internal changes often result from such probes.

Follow-up Questions for Symantec Management:

  • When was the Audit Committee and the auditor notified?
  • When was outside counsel first retained on this matter?
  • What information informed the decision to delay the 10-K?
  • Why is management effectively hiding out, and refusing to answer even basic questions about this exposure?

The cautionary note for investors is clear: Instead of being straight with investors about the SEC aspect of its accounting issues, we assert Symantec management instead chose to keep critical information from you.

Whenever you see that you need to ask, what else are they holding back? The existence of an undisclosed SEC investigation with a start date unknown is a good place to begin.

  • Probes Reporter

“Disclosure Games is a term we use to highlight those public companies engaging in disclosure practices that in our opinion may be misleading, confusing, evasive, or otherwise lacking the transparency needed for investors to make well-informed investment decisions regarding a potentially material exposure.

Independent Investment Research Focused on Public Company Interactions with the SEC.

Notes : Our Disclosure Insight reports, like those coming from other financial news and data providers, provide the investing public with commentary and analysis on public company interactions between investors and/or with the SEC and other agencies. They are journalistically based in large part on our expertise with federal filings using the Freedom of Information Act.

If we alert you to existence of an undisclosed SEC probe, that means we filed a Freedom of Information Act (FOIA) request with the SEC on the company in question and have a response, in black-and-white, on government letterhead that supports our statement. The only thing we know at this time is that the probe(s) somehow pertains to the conduct, transactions, and/or disclosures of the companies referenced.

New SEC investigative activity could theoretically begin or end after the date covered by the latest information in this report which would not be reflected here. The SEC did not disclose the details on investigations referenced herein. All we know is that they somehow pertain to the conduct, transactions, and/or disclosures of the companies referenced above. Companies with undisclosed SEC investigations are maintained on our Watch List of companies with undisclosed SEC probes.

The SEC reminds us that its assertion of the law enforcement exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security.

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