UPDATE 2-Huron shares rise; analysts warn some risks remain

 * Shares jump by more than a third

 * SEC filings remove some fears

 * Company still sees risks from "reputational issues"
 (Recasts, adds details from filings, analyst comment, updates
share movement)

 CHICAGO, Aug 18 (Reuters) - Huron Consulting Group HURN.O
shares jumped 35 percent a day after the company reported
better-than-expected results, but analysts warned that
questions about Huron's reputation and outlook that walloped
the stock earlier this month still linger.

 Huron shares rallied to $18.48 in Tuesday afternoon trading
on the Nasdaq, partially reversing a loss of more than 70
percent suffered earlier this month when the company said its
entire top management team would exit amid an accounting
scandal.

 Despite a second-quarter profit that topped Wall Street's
view, and some investor relief that the earnings restatement is
complete, analysts noted that Huron still faces risks to its
reputation and operations.

 "It doesn't necessary mean the future of the company has
changed one way or the other," said Joseph Foresi, an analyst
at Janney Montgomery Scott.

 "Some of the issues that the company faces in the near term
are still there," he said. Janney currently has a "neutral"
rating on Huron shares.

 Earlier this month, Chicago-based Huron, which rose in 2002
from the ashes of collapsed accounting giant Arthur Andersen,
said its entire top management team would leave the company and
that it would restate more than three years of results.

 The news came after Huron's audit committee discovered
shareholders of four businesses that Huron acquired between
2005 and 2007 redistributed portions of their
acquisition-related payments among themselves and to certain
Huron employees who were not identified.

 The revelations were a blow to the company's credibility
and its shares immediately plunged.

 Huron, which is being investigated by the U.S. Securities
and Exchange Commission (SEC), reassured investors on Monday
that no more restatements would be necessary.

 SHORT COVERING

 While the SEC announcement unquestionably improved
investors' mood on the shares, Tuesday's gain was likely
boosted by some investors covering previous short positions,
said William Lefkowitz, option strategist at brokerage firm
vFinance Investments.

 "Earlier this month, when the stock collapsed, some
investors shorted it, expecting that trend to continue. Now
those investors are getting squeezed," Lefkowitz said.

 "With the good earnings we are seeing a short-covering
rally. In addition, some investors might be buying the stock
with more confidence in their underlying business," he said.

 A short position occurs when an investor borrows shares and
sells them, expecting the price to fall. If the market goes up,
however, short sellers are forced to buy back their shares.

 Huron posted a second-quarter profit above analysts'
expectations, helped by higher revenue from its health and
education consulting segment.

 "The news seems to have removed a cloud from over the
stock, which plunged nearly 70 percent on the restatement news
on Aug. 3," said WhatsTrading.com option strategist Frederic
Ruffy.

 The company said in a regulatory filing that due to the
significant decline in its stock price, it may record a noncash
goodwill impairment charge for the quarter ending Sept. 30,
leading to noncompliance with the financial covenants in its
credit agreement.

 "Overall, we view the new disclosures as a slight net
positive, giving more visibility on some unknowns, but
introducing other unknowns," said Sean Jackson, analyst at
Avondale Partners, in a research note.

 REPUTATIONAL RISK

 In a separate government filing, Huron said it would
cooperate with SEC investigators but that it could not predict
the outcome of an investigation, or private lawsuits.

 The company said it may sustain damage arising from
"reputational issues" that may affect the company's ability to
retain senior managers and attract new talent and new
business.

 Huron also noted potential distractions for management,
increased costs and expenses related to the SEC investigation,
damage to Huron's reputation, the possible imposition of
fines.

 In a filing, Huron said it has "identified a material
weakness in our internal control over financial reporting"
related to accounting for acquisition-related payments.

 "Due to its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements,"
Huron said.

 Huron has scheduled a conference call with analysts for
Wednesday.
 (Reporting by Kyle Peterson and Doris Frankel; Editing by Tim
Dobbyn and Matthew Lewis)