Publicly traded cataloger/retailer Spiegel hid information about its shaky financial state for more than eight months, according to a report issued Sept. 12.
Independent examiner Stephen Crimmins of law firm Pepper Hamilton put together the report as one of the conditions of Spiegel’s partial settlement of a lawsuit filed against it by the Securities and Exchange Commission (SEC).
In his report, Crimmins says that Spiegel’s auditors told the company that it would have to attach a “going concern opinion” — meaning that the auditors had doubt as to the survival of the company — to its 2001 10-K filing. Rather than file the report with the warning as required, Spiegel delayed issuing the filing. The Downers Grove, IL-based parent company of Eddie Bauer, Newport News, and the Spiegel catalog did not file the 2001 10-K until this past February — eight months later than scheduled — when the SEC began an investigation.
The report was quoted as saying that Spiegel’s “desperate financial difficulties were compounded by a string of material accounting irregularities lurking beneath the surface of its public disclosure.”
In a statement, Spiegel said it remains committed to co-operating fully with the SEC in its investigation of the company’s compliance with federal securities laws. Spiegel is not commenting on the investigation or the report.
Spiegel filed for Chapter 11 bankruptcy protection in March. A few days before Crimmins’ report was released, Spiegel announced that it was seeking a buyer for its Newport News women’s apparel catalog.