Lernout & Hauspie (LHSP) 8 9/16 -1 3/16: As the saga continues, LHSP shares have dipped to a new 52-week low today on word that LHSP management will not furnish the SEC with the names of investors in the 30 corporate customers that have been called into question by the SEC investigation. The Wall Street Journal's Michael Schroeder cites "people familiar with the matter" saying that LHSP will not disclose the information requested by the SEC. Followers of this story will recall that when LHSP reported a jump in Korean sales from $97,000 last year to $58.9 mln in Q1, there were many skeptics in the financial media, and after the Journal published an investigative piece that pointed to some reporting improprieties in August, an SEC probe was initiated. The 30 companies in question accounted for about 25% of LHSP's 1999 revenues, and the SEC is trying to determine whether these companies are legitimate outside customers, not LHSP-related parties. The Journal says LHSP did disclose that they helped finance the start-ups, but the companies are owned by independent, outside investors. LHSP also disclosed information on 17 of the companies, none of them have any employees, seven of them have LHSP employees doing work for them and the other ten have paid large license fees to LHSP despite not having ever produced any software.
Because LHSP is a Belgian company, the SEC has limited power in issuing subpoenas for their records kept abroad. Today's illumination removes the doubt as to why former President and CEO, Gaston Bastiaens stepped down in the midst of the controversy. These clients do not appear to be unrelated parties, and LHSP's failure to disclose that information has lead to the erosion of any remaining investor confidence, and will probably lead to some indictments. - Matt Gould, Briefing.com
From briefing.com |
