WASHINGTON, Oct 22 (Reuters Legal) - Office Depot Inc., its chief executive and a former executive agreed to collectively pay more than $1 million to settle regulators’ charges of improper disclosures to analysts, the U.S. Securities and Exchange Commission said on Thursday.
The SEC had accused the company, its CEO Stephen Odland and former chief financial officer Patricia McKay of conveying to analysts and big investors that the company would not meet analysts’ earnings estimates for the second quarter of 2007.
Shares of the second-largest U.S. retailer of office supplies closed down 0.85 percent at $4.65 on Thursday.
Under securities rules, public companies must widely disseminate material information.
According to the SEC, company executives discussed how to encourage analysts to revisit their second quarter forecasts. The office supplier then signaled to analysts that it would not meet expectations, and analysts lowered their estimates.
“Talking Wall Street down from its earnings projections whether done expressly or through signals is prohibited,” said Eric Bustillo, director of the SEC’s Miami office.
According to the SEC, the executives were not present during the calls but were aware of analysts lowering their estimates and encouraged the calls to be completed.
Office Depot, which did not admit or deny the charges, agreed to pay $1 million to settle them, the SEC said. Odland and McKay also agreed to each pay $50,000 to settle the charges without admitting or denying any wrongdoing, according to the agency.
Office Depot, which disclosed the settlement in a regulatory filing, said in an email that it had no further comment at this time. A lawyer for Odland had no comment. McKay’s lawyer did not return a call seeking comment.
The case is Securities and Exchange Commission v. Office Depot, Inc., U.S. District Court, Southern District of Florida, No. 10-81239. Daniel Shea of Hogan Lovells in Denver represented Office Depot. John Sturc of Gibson, Dunn & Crutcher in Washington, D.C. represented Odland, and Charles Mills of K&L Gates in Washington, D.C., represented McKay. Steven Meiner of the SEC’s Miami Regional Office represented the agency in the settlement.
Reporting by Rachelle Younglai and Dhanya Skariachan of Reuters; Additional reporting by Terry Baynes of Reuters Legal
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