SEC, U.S. Atty. probing Viv Uni
November 5, 2002 - The Hollywood Reporter
Vivendi Universal said Monday that it is under investigation by both the U.S. Securities and Exchange Commission in Miami and the U.S. Attorney’s Office for the Southern District of New York.
The exact nature of the inquiries was not released, but the SEC investigation is referred to as an “informal inquiry,” and the U.S. Attorney’s Office’s is reportedly a “preliminary investigation.” The units will be cooperating in their inquiries.
According to a Vivendi Uni statement Monday, “Vivendi Universal intends to cooperate fully with both investigations.” A Vivendi Uni spokesman in Paris and a spokeswoman in New York declined comment Monday beyond the company’s statement.
Citing agency policies, spokesmen for Jim Comey, the U.S. attorney for the Southern District of New York, and the SEC also declined comment and wouldn’t even confirm the existence of any probes.
According to one person close to the situation, the SEC and U.S. Attorney’s Office have conducted only preliminary probes of Vivendi Uni’s accounts and seem focused mostly on accounting and disclosure practices similar to those that French authorities have been investigating from the Jean-Marie Messier era.
That same person said Vivendi Uni’s counsel will meet soon with investigators to discuss the potential provision of financial documents and interviewing of executives. Further details were not immediately available.
Vivendi Uni also is under scrutiny in Paris, where it is being examined in a criminal investigation for its dealings under former chief Messier. In a French public prosecutor’s investigation announced Wednesday, the French small-investor group APPAC claimed that Vivendi Uni gave false annual report figures for the years 2000 and 2001 while inflating the perspectives for 2001 and 2002.
French stock exchange watchdog group the COB began examining Vivendi Uni in July, saying the company had been trying to “use its muscle” to win acceptance on European regulations. The COB will be cooperating with the public prosecutor’s investigation.
A Vivendi Uni spokeswoman declined comment. In recent months, several shareholder lawsuits have claimed that the company misrepresented its financial health under Messier, thereby inflating its stock price. When Messier was ousted, new CEO Jean-Rene Fourtou disclosed that Vivendi Uni had been close to bankruptcy this summer.
Comey has been instrumental in the authorities’ recent crackdown on alleged Wall Street misconduct. Among others, he has led the charge in such high-profile cases as the criminal indictments this summer of Adelphia Communications founder John Rigas and some of his sons and close associates. Comey’s office also has investigated the finances of telcom giant WorldCom.
Meanwhile, Vivendi Uni continues talks with a group of private equity firms over a final sales agreement for its Houghton Mifflin U.S. educational publishing unit, a spokeswoman in New York said. The two sides late last week entered exclusive negotiations and indicated that they hope to finalize a deal within a week.
Vivendi Uni stock closed down more than 3% on Monday at 12.05.
Joe Ray reported from Paris; Georg Szalai reported from New York.
