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In a regulatory filing released by Alcoa Inc. on Friday, company officials confirmed that the Securities and Exchange Commission requested documents and other information in connection with an ongoing informal investigation related to “certain trade-payables financing,” involving an intermediary.
The request for information was made on January 28, according to the aluminum producer’s most recent 10-K filing. It concerns the classification and disclosure of certain trade accounts payable transactions for periods beginning after December 31, 2002.
Accounting questions surfaced around Alcoa’s computerized payable settlement arrangements it had with vendors and third-party intermediaries, reported Reuters. According to the news wire’s account of the system, at the vendor’s request, a third-party intermediary advances the amount owed to the vendor, minus a discount, before the payment is due. Alcoa then pays the intermediary on the date stipulated with its vendors.
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Alcoa officials said the amounts outstanding that will be paid through intermediaries were classified as short-term borrowings, and as cash provided from financing activities in its year-end 2004 financial statements, according to Reuters.
The SEC staff has advised Alcoa that the inquiry should not be construed as an indication, “that any violations of law have occurred,” noted the regulatory filing. Alcoa said it is “fully cooperating with this inquiry.”
Separately, Alcoa announced yesterday that it was named the country’s most admired metals company by Fortune magazine.
The SEC also has subpoenaed a frequent guest of the radio shock jock Howard Stern over possible insider trading of Sirius Satellite Radio stock.
Chaunce Hayden, a New Jersey-based gossip columnist, said the SEC had ordered him to appear on Wednesday in New York to give information about trading in shares of Sirius, Stern’s future radio home, according to the Associated Press.
Hayden apparently made an on-air prediction that Stern would leave broadcast radio for satellite radio, and then coincidentally had been in the studio when Stern announced in October he would move to Sirius in 2006.
In a phone call to Hayden, an SEC attorney asked, “why I was up in the studio the day Howard made the announcement and if I heard anything that day,” among other questions, Hayden told Reuters.
Hayden claims to have never owned Sirius stock, except for some shares that are part of a 401-K retirement fund.
Sirius stock rose more than 15 percent on the first day of trading after Stern’s announcement.
Sirius spokesman Patrick Reilly did not comment on the case, but told Reuters that he had no reason to believe the investigation involved Sirius or any actions of its officers, directors or employees.” He added that no Sirius employees or directors have been subpoenaed in this matter.
An SEC spokesman had no comment, and spokesman for Stern could not immediately be reached for comment, said the wire service.
In other regulatory news, the SEC announced that it would host a roundtable discussion and would solicit written feedback regarding the experiences of registrants, accounting firms, and others in implementing the new internal control requirements under Section 404 of the Sarbanes-Oxley Act of 2002.
The discussion will be held on Wednesday, April 13, 2005, at SEC headquarters, beginning at 9:00 a.m. The roundtable will be open to the public, and it may also be Webcast.
Under Section 404, companies are required to file annual reports with the Commission to report on management’s responsibilities to establish and maintain adequate internal control over the company’s financial reporting process, as well as management’s assessment of the effectiveness of those internal controls.
Members of the public are encouraged to provide the submissions before April 1, 2005.
