EMC Corporation: New Data Re-Affirms Risk Of Involvement In An Undisclosed SEC Investigation
This was previously posted to the Probes Reporter website on 17-Dec-2014.
The Probes Reporter™ Watch List tracks those companies involved in undisclosed SEC investigative activity. Names are added to and removed from this list frequently based on responses we receive to Freedom of Information Act (FOIA) requests we file with the SEC. This is our latest update.
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EMC Corporation (NYSE: EMC): New SEC Data Point Re-affirms Risk of Involvement in an Undisclosed SEC Investigation. In a letter dated 07-Nov-2014, the SEC cited the "law enforcement exemption" of the FOIA as basis to deny the public access to the detailed records we sought on this company. As a matter of law, they are acknowledging some sort of investigative activity.
The SEC has blocked our access to investigative records on EMC Corporation in multiple FOIA requests going back to 02-Nov-2012.
As recently as 21-Apr-2014, the SEC had even confirmed that this company was somehow involved in a recently active and ongoing investigation. A confirmed investigation is the highest standard we can achieve regarding undisclosed SEC activity at a public company.
Documents in our database point to an SEC probe of EMC from Jun-2011 to Jan-2012 regarding use of private aircraft and private air travel by certain company executives.
No disclosures of SEC investigative activity were found in the past two years of this company’s SEC filings.
We filed an administrative appeal to challenge this latest denial. In our experience, about two-thirds of these SEC responses are confirmed on appeal.
EMC Corporation is maintained on our Watch List as a company with at least one Confirmed Undisclosed SEC Investigation.
What’s The Difference Between A “Possible” Versus A “Confirmed” SEC Investigation?
When we report on risk of undisclosed SEC investigative activity for a company, it is based upon a response from the United States Securities and Exchange Commission (SEC) to one of the approximately 2,500 Freedom of Information Act (FOIA) requests we file with the agency each year seek. Our requests seek information concerning the conduct, transactions, and/or disclosures of public companies.
There are many legitimate reasons for the government to deny a FOIA request. One reason often cited by the SEC is the so-called “law enforcement exemption” of the FOIA. As a matter of law, the SEC is acknowledging some sort of investigative activity when it asserts this exemption. To learn more about FOIA exemptions, go to FOIA.gov. To learn more about the law enforcement exemption specifically, see also Department of Justice Guide to the Freedom of Information Act, Exemption 7(A).
We know from experience there can be many reasons for the FOIA office of the SEC to assert the law enforcement exemption. Some would be of little to no consequence to investors. Others would be of great concern, and can have meaningful negative consequences for investors.
If the SEC cited the law enforcement exemption to deny the public access to records on a public company, and if no disclosures of SEC investigative activity were found in the past two years of this same company’s SEC filings, we then add the company to our Watch List as a company with a "Possible Undisclosed SEC Investigation".
Again, to say a company has a possible SEC probe is not the same as when we say it has a "Confirmed Undisclosed SEC Investigation". As we say in our reports, a confirmed investigation is the highest standard we can achieve regarding undisclosed SEC activity at a public company. Here's why --
When the SEC asserts a law enforcement exemption, if warranted, we then file an administrative appeal with the SEC’s Office of General Counsel. The appeal process allows a different set of eyes within the SEC to manually review our request and the initial denial. In response to our administrative appeal, the SEC typically does one of the following –
- The SEC can deny our appeal by saying, "We have confirmed with staff that the responsive matter remains open and that releasing the withheld information could reasonably be expected to interfere with the on-going enforcement proceedings."
This is why we say this is the highest standard of affirmation we can achieve regarding undisclosed SEC activity at a public company. We interpret this appeal response to mean the company is involved in an SEC investigation that somehow involves its conduct, transactions, and/or disclosures. Companies on which we receive this response are maintained on our Watch List.
- The SEC may deny our appeal on grounds there are no records responsive to our request. This may be because the Company was incidentally named or tangentially listed in an SEC investigation of some other person or entity; or, there was an investigation that concluded in the past but the SEC’s computerized records were not current at the time of our request. Companies on which we receive this appeal response are removed from our Watch List.
- We may be informed the law enforcement exemption no longer applies and our request has been remanded back to the FOIA office for further processing. We interpret this response to mean there was an investigation that is now over and records from that investigation may now be provided to us. Companies on which we receive this appeal response are removed from our Watch List.
- Finally, the SEC could inform us the law enforcement exemption was cited in error. We rarely see this but it does happen. Companies on which we receive this appeal response are removed from our Watch List.
Notes: The SEC did not disclose the details on investigations referenced above. The SEC reminds us that its assertion of the law enforcement exemption should not be construed as an indication by the Commission or its staff that any violations of law have occurred with respect to any person, entity, or security. New SEC investigative activity could theoretically begin or end after the date covered by this latest information which would not be reflected here.
Disclaimer: Probes Reporter, LLC is not an investment adviser and does not offer or provide personalized investment advice. The information on ProbesReporter.com is not a solicitation connected to any security. The information we provide is obtained from company submissions and our own Freedom of Information requests made to the Securities and Exchange Commission. No representation or warranty is made as to the timeliness or completeness of any information found on ProbesReporter.com.
Probes Reporter does not adopt the truth or falsity of the contents of any of the documents or filings referred to on this website, and no conclusion of wrongdoing should be inferred from the fact that an investigation has been initiated by the SEC. Probes Reporter is not the guarantor of any investment and cannot be held liable for any losses or expenses incurred as a result of reliance upon any information contained herein, and ProbesReporter.com is not a substitute for your own due diligence, which may include advice from an investment professional.
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