SEC investigating Huron for accounting errors
Written on August 12, 2009
Huron Consulting Group Inc, whose shares plunged in the wake of an accounting scandal, said the U.S. Securities and Exchange Commission is investigating it for acquisition-related payments, and it will delay filing its latest quarterly report.
Earlier this month, the consulting firm’s entire top management quit as it said it would restate more than three years of results, slashing its profits by almost half because it misreported costs related to acquisitions.
Huron’s board audit committee discovered that 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.
The company continues to evaluate the impact of the restatements, it said in a regulatory filing on Tuesday.
It intends to file its quarterly report for the three months ended June 30, as well as the restated results of the prior periods, as soon as possible.
Chicago-based Huron, which was founded by two dozen partners from the collapsed accounting firm Arthur Andersen, said it intends to cooperate with the SEC in its investigation.
The company could not immediately be reached for comment.
Huron had said in July it was conducting a separate investigation into its allocation of chargeable hours in response to an inquiry from the SEC instant cash advance.
The company said it did not expect the allocation inquiry to result in a material adjustment to its historical financial statements.
Huron is in the process of reviewing its internal controls over financial reporting and expects that it will identify one or more material weaknesses.
The company will also assess its disclosure controls and procedures.
Huron has been hit with a spate of shareholder lawsuits since it announced the accounting problems. The company has said it intends to defend itself vigorously.
Huron built a reputation as an expert on litigation and regulatory issues. It advised United Airlines, a unit of UAL Corp, on its bankruptcy and helped uncover accounting shortfalls at mortgage giant Fannie Mae. That eventually led the SEC to charge Fannie Mae with fraud.
Shares of Huron closed at $13.54 on Nasdaq Monday. They have fallen 69 percent since July 31, when the company first announced it would restate results and its chief executive resigned.
(Reporting by Sweta Singh in Bangalore; Editing by Mike Miller)
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