No Fine As SEC Ends Investigation Into Tribune Co. Circ Scandal

By: E&P Staff The U.S. Securities and Exchange Commission (SEC) ended its investigation into the inflated circulation statements of Newsday and Hoy without imposing a fine, Chicago-based publisher Tribune Co. announced Tuesday.

Tribune said the SEC issued a ?cease and desist? order not to violate statutory provisions related to record-keeping and reporting, but imposed no additional sanctions.

In 2004, massive circulation inflation was discovered at Tribune?s Newsday and at the New York edition of its Spanish-language daily Hoy. Newsday?s circulation had been misstated by more than 100,000 copies, and Hoy?s circulation had been doubled artificially. Tribune has paid advertisers about $90 million in restitution.

In April, Louis Sito, the former number-two business executive at Newsday and Tribune?s first vice president of Hispanic media, pleaded guilty to fraud charges related to the circulation scandal. At least seven other Newsday employees have pleaded guilty in the case.


In a statement Tuesday, Tribune Chairman and CEO Dennis FitzSimons said the ?circulation misstatements at Newsday and Hoy were caused by the actions of a few people who are no longer employed at either newspaper."

FitzSimons said Tribune had installed a new management team and new circulation controls at the two New York papers, and ?tightened circulation policies, systems and procedures at all of our newspapers."

Tribune said an investigation of its other papers had found no significant circulation misstatements.

?We're happy the SEC's findings are consistent with our own investigation results and that we have closed this matter,? FitzSimons said.

According to Tribune, the SEC acknowledged the "...remedial acts promptly undertaken by Tribune and the cooperation that Tribune afforded the Commission staff," and credited the company with quickly investigating the misstatements, and firing employees involved.