By: Jennifer Saba
Little is known for sure about the recently disclosed Securities and Exchange Commission (SEC) fishing expedition at about eight newspaper companies and the Audit Bureau of Circulations. In the October issue of the Morton-Groves newsletter, analyst John Morton weighed in with a possible outcome.
On the “upside,” he wrote, “if the SEC ultimately finds that newspapers generally do an honest, accurate job of reporting to the ABC,” the cloud of suspicion hovering over the industry’s circulation practices “could be fully dissipated.” But it’s unlikely any investigation will be a speedy one, he warns. The fact that the probe will likely drag on for months only prolongs the suspicion that something may be rotten.
The SEC isn’t taking any chances, thanks to Enron. Edward Atorino of Fulcrum Global Partners suggests that’s the reason the SEC is more aggressive these days. “Undoubtedly there’s an administrative guy down there who read about the [circ scandal],” he says. “They don’t know about this and they probably wanted to find out more. Why they need to know is beyond me.”