Well, it looks like Pre-Paid Legal Services Inc. is the latest target of the Securities and Exchange Commission.
Pre-Paid Legal Services, Inc. confirmed published reports that the Company is the target of an informal inquiry by the Ft. Worth Office of the Division of Enforcement of the Securities and Exchange Commission.
The company said that it has responded to confidential comments made by the SEC's Division of Corporation Finance regarding the Company's 1999 Form 10-K.
Randy Harp, Chief Operating Officer commented in a press release, "We have received inquiries from both the Division of Enforcement and the Division of Corporation Finance of the SEC requesting information relating to our accounting policies for commission advances to sales associates. These are informal inquiries and do not constitute a formal investigation or proceeding. We are cooperating with the staff of the SEC and providing the requested information and expect to continue to do so.''
The Commission is said to be looking into the accounting practices of the marketer of legal service plans, including the possible overstatement of at least $78 million in revenues, according to published reports.
In January, shareholders filed class action suits against the company, saying Pre-Paid misled investors in its financial statements, reporting commissions paid to sales people as assets instead of expenses, which resulted in at least $78 million in overstated revenues and inflated the share price.
Pre-Paid pays commissions on policies up to three years in advance because they represent ``probable future economic benefits,'' the company said in an SEC filing. The company said it can recover the money from its sales staff if a policy lapses before the three years.
Today's Deal News
- Interpublic Group of Cos. has agreed to acquire True North Communications Inc. for $2.1 billion in stock. The deal calls for Interpublic to offer a fixed exchange ratio of 1.14 of its shares for each True North share, valuing True North at $40.24 a share, a premium of only 2 percent over its closing price Friday of $39.31.
- AmeriSource Health Corp. and Bergen Brunswig Corp., the two largest drug distributors, agreed to a merger of equals valued at $2.4 billion in stock, plus the assumption of about $1.3 billion in debt. Under the deal, Bergen shareholders will receive 0.37 shares of the new company called AmeriSource-Bergen for each share of Bergen they own, while AmeriSource shareholders will receive one share of the new company for each share held. The merged company will have $2 billion in debt.
- Although both NetIQ and WebTrends maintain a merger is still on, the 75 percent plunge in NetIQ's stock price over two months--which has lowered the deal value from $1 billion to $254 million--may end up derailing the merger, according to Thedeal.com.
- The U.S Department of Justice will not raise antitrust objections to the $742 million deal between AMR Corp. and TransWorld Airlines Inc.
- FPL Group Inc. and Entergy Corp. Monday said that problems have arisen in connection with their pending merger, including issues related to governance structure and value, as well as the integration of the two companies. In a press release, the utilities said "certain issues have arisen in connection with their pending merger, including governance structure/value-related issues and integration of the two companies going forward." Entergy and FPL agreed in July 2000 to a merger of equals valued at $7 billion in stock that would create the largest U.S. utility. Under terms of the deal, neither company's shareholders would receive a premium and FPL shareholders were to own 57 percent of the combined company.
- European Commission regulators are expected to meet their U.S. counterparts in Washington this week to discuss their concerns about General Electric's $34.7 billion takeover of Honeywell, according to FT.com. The two groups of regulators plan to visit airlines, avionics companies and G.E.
- In a deal involving two mining giants, Britain's Billiton agreed to merge with BHP of Australia.
Today's Layoff News
- Primedia Inc. said that it plans to cut 160 jobs following the recently completed acquisition of Web publisher About.com. Primedia said it plans to eliminate about 140 positions at its technical and trade-publishing unit Intertec, and 20 positions at IndustryClick, which runs business-to-business online communities dedicated to various industries.
- Cooper Industries Inc. cut its first-quarter earnings forecast Friday and said it may eliminate nearly 6 percent of its jobs because the slowing economy has hurt orders from electronics and telecommunications companies.
- Exabyte expects to cut its workforce by 250 people
- Even board members aren't being spared. Supermarket chain Albertson's Inc. said on Friday that it will cut the number of members on its board of directors from 19. As a result, five members will resign. The company said Fernando Gumucio, Charles Lein, Arthur Smith, Steven Symms and Thomas Wilford, have volunteered to resign, effective June 14, as part of its corporate governance guidelines.
From the CFO.com "Brief" Case
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