Steinmart moves on after SEC investigation

Steinmart didn’t admit wrongdoing and the Securities and Exchange Commission didn’t bring any charges, but concluding a nearly five year old accounting investigation still cost the company $800,000.



An $800,000 fine may not sound like much to retailers with annual sales in the billions, but Steinmart is relatively small, generating sales of $311 million from 269 stores in the second quarter. An $800,000 fine represents 20% of the company’s net income for the period.



The SEC investigation related to the company's restatement of its financial results for the first quarter of fiscal year 2012, all reporting periods in fiscal year 2011 and its annual reporting period in fiscal year 2010 and change in auditors.



The SEC determined that Steinmart had violated the reporting, books and records, and internal controls provisions of the Securities Exchange Act of 1934 during the restatement period. The company agreed to a settlement without admitting or denying the findings of the SEC and also agreed to pay a civil penalty of $800,000. The company previously established a reserve for the potential settlement of a sufficient amount to require no significant adjustment in the third quarter of 2015.



According to a Steinmart statement, the SEC did not allege fraud by the company and did not bring charges against any individual. In connection with the settlement, the SEC considered remedial acts undertaken by the company, including its enhancement of internal controls, retention of additional accounting personnel, and the company's cooperation with the SEC staff during the course of the investigation.