UPDATE 1-Schawk gets Wells notice from SEC; shares fall

Mon May 23, 2011 10:33am EDT

* Schawk says cooperating with SEC's Wells notice

* SEC had been inquiring into 2008 restatement

* Schawk shares fall as much as 8.9 pct

NEW YORK, May 23 (Reuters) - Schawk Inc SGK.N, a provider of digital imaging graphic services, said it may face U.S. Securities and Exchange Commission civil charges relating to a 2008 restatement, and its shares fell as much as 8.9 percent.

The company said it received a "Wells notice" from the SEC on May 17 concerning alleged securities law violations pertaining to the maintenance of accurate books and records and adequate internal accounting controls.

Schawk did not immediately return a call seeking an additional comment.

A Wells notice indicates that the SEC may bring civil charges, and gives the recipient a chance to mount a defense. The Des Plaines, Illinois-based company disclosed the Wells notice in a filing late Friday with the SEC.

Schawk in April 2008 restated financial results for 2005, 2006 and the first three quarters of 2007, reducing earnings for several of the affected periods.

The restatement corrected accounting errors including how Schawk recognized revenue and capitalized software development costs. Schawk also said it had found material weaknesses in its internal controls. Shares of Schawk fell 5.8 percent on the day after the company announced plans for the restatement.

In Friday's filing, Schawk said it had previously disclosed that the SEC had been examining issues surrounding the restatement. It said it has been and intends to continue cooperating with the regulator.

Schawk's shares fell $1.34, or 7.7 percent, to $16.16 in morning trading, after earlier falling to $15.95. (Reporting by Jonathan Stempel in New York, editing by Maureen Bavdek)

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