Office Depot to Pay $1 million to settle SEC fraud charges...No Admissioin nor Denial of Allegations

The company's selective sharing of

information "gave an unfair advantage to

favored investors at the expense

of other investors"

(...this is how Wall Street Rolls...are you feeling confident?

Just write a check... no need to admit nor deny...)

By Marcy Gordon
Bloomberg/Business Week
10/21/10
Office Depot Inc. has agreed to pay $1 million to settle federal charges that it overstated earnings and shared information with a select group that it failed to include in public filings.

The Securities and Exchange Commission on Thursday announced the settlement with Office Depot, which neither admitted nor denied the allegations.

The company was accused of overstating earnings in mid-2006 through mid-2007. It was also accused of letting a select group of investors and analysts know that it wouldn't meet earnings estimates for the second quarter of 2007.

In addition to the company fine, chief executive Stephen Odland and former chief financial officer Patricia McKay agreed to pay civil penalties of $50,000 in connection with the charges for sharing information.

In the second quarter of 2007, Office Depot executives made a series of one-on-one calls to analysts, the SEC said in a civil lawsuit filed in federal court in Miami. The executives didn't directly say that Office Depot wouldn't meet analysts' expectations, but signaled that information by referring to recent public statements by companies with a similar profile about the impact of the economic slowdown on earnings, according to the SEC.

Analysts lowered their earnings estimates in response to the calls.

Odland and McKay neither admitted nor denied the allegations. The SEC said the executives encouraged the company to conduct the calls but didn't participate in them directly. Others in the company made the calls even after McKay was told that some analysts had concerns about the lack of public disclosure, the SEC said. Six days after the calls began, Office Depot made an SEC filing announcing that earnings would be reduced because of weakness in the economy. Before the filing was made, Office Depot's share price had fallen sharply.

The company's selective sharing of information "gave an unfair advantage to favored investors at the expense of other investors and, as today's action shows, is illegal," SEC Enforcement Director Robert Khuzami said in a statement.

Office Depot...Our Values

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Accountability

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