Three strikes for Black Box and its investors.
Since November of last year investors in Black Box (NASDAQ: BBOX, BullBoards) have been stung by a series of revelations by the company.
First, on November 17, 2006, the company, a distributor of technical network services, disclosed that it had received a letter of informal inquiry from the SEC requesting documents related to the company's stock option practices from January 1, 1997 to the present.
Second, on March 20, 2007, the company disclosed it expected to restate nearly 15 years of financial statements due to improper accounting for stock option grants.
Third, on May 22, 2007, the company's CEO resigned and the company did not provide a reason.
Finally, on June 1, 2007, the Company disclosed that the SEC had commenced a formal investigation of the company relating to its stock option grant practices.
Beside Black Box's ongoing problems related to stock options backdating, the company also has suffered from alleged improper conduct at a foreign operation. Specifically, on June 1, 2006, Black Box disclosed that during the fourth quarter of fiscal 2006, it incurred a pre-tax charge of $7.1 million related to an adjustment of earnings. The company explained the adjustment was due to intentional misconduct by certain management at the company's Italian operations.
It appears that investors who purchased Black Box between August 2, 2002 and May 21, 2007 are affected.
Investigation at CTS Corp
Indiana-based CTS Corp. (NYSE: CTS, BullBoards) is a designer and manufacturer of electronic components. On February 9, 2007, CTS announced before the opening of trading an investigation of accounting issues identified while reconciling accounts related to payables and inventory. As a result, the company stated that its full year 2006 diluted earnings per share will be significantly below its previously disclosed estimates. The company also disclosed that these accounting issues may affect multiple quarters in 2006 and, as a result, management determined that the company's financial statements for the first three quarters of 2006 should not be relied upon.
It appears that investors who purchased CTS between April 25, 2006 and February 8, 2007 are affected.
We are investigating both of these cases and if you are an affected investor you may want to contact us at 202 338 1756 or [email protected]
Mark McNair is an attorney in private practice who represents investors in securities litigation and was formerly an attorney at the Securities and Exchange Commission. For additional information, go to securitiessleuth.com
StockHouse Conflict and Disclosure Policy:
Stockgroup Media Inc., owners and operators of StockHouse.ca/com, has established rules to ensure that there is no appearance of impropriety on the part of any StockHouse writers who discuss or name individual public companies in the content published on the StockHouse websites. The content of StockHouse Editorial articles are the opinion of the writer and any reliance on the content of these articles shall be at your sole risk.
StockHouse Editorial writers may own, buy, or sell shares in public companies mentioned in their articles. Please be advised that a conflict may exist and that any investment decisions you make are your own responsibility. Additionally, our Editorial writers are not registered investment advisors. You should not make any kind of investment decision in relation to these articles or stocks discussed in them without first obtaining independent investment advice from a registered investment advisor.
Facts relied upon by our Editorial writers in arriving at their opinions are generally provided by the subject companies or gathered by our Editorial writers from other public and/or private sources. These facts may be in error and if so, the opinions of our Editorial writers may be materially different.
Rules applying to StockHouse Editorial Writers
StockHouse Editorial writers may own stock of any company they cover, but at the bottom of the article or within the article they must clearly and prominently state their ownership position in the company.
StockHouse Editorial writers cannot solicit, accept, or agree to receive anything of value given or paid with the intent of influencing their editorial articles published on StockHouse.
StockHouse Editorial writers are not permitted to write articles that attempt to influence or benefit persons connected to the writer such as family or friends, , except where disclosure is made in the same way as if the writer him/herself owns stock.
StockHouse notifies each Editorial writer about these rules but in case of a possible breach of our rules, we may not be in a position to find out or investigate the facts. We rely on the integrity of our writers to ensure that our rules are followed.