Saks reaches settlement with SEC

NEW YORK, New York Saks Inc. on Wednesday settled the investigation conducted by the Securities and Exchange Commission (SEC) into alleged financial reporting violations by the company. There was no admission of guilt or financial penalty, but Saks did agree to a permanent injunction against future violations.

The investigation, which began in March 2005, involved charges that the company's luxury department store, Saks Fifth Avenue, made misstatements of company earnings in previous years.The SEC alleged that workers of Saks Fifth Avenue Enterprises used deceptive practices, from at least 1999 to 2003, to achieve monthly, quarterly and seasonal financial targets, which then led to inflated earnings reports by Saks for the 2000 through 2003 fiscal years. 

The SEC investigation was launched after an internal investigation and audit by Saks showed that the company's Saks Fifth Avenue division owed vendors $26 million for markdown allowances during the 1999 through 2003 fiscal years. With interest, 7.25% annually, Saks paid $48.2 million back to vendors.

Stephen Sadove, chairman and ceo of the company, stated “I am pleased that this settlement with the SEC puts these matters behind us as we continue to execute our strategies for the long-term success of our business.”