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The SEC has just filed a complaint against Sequential Brands Group,
Inc., a brand management company, for failing to take timely and
appropriate goodwill impairment charges as required by GAAP and the
federal securities laws, despite clear evidence of goodwill
impairment (according to the press release). As a result, the SEC alleges,
the company materially understated its operating expenses and
net loss and materially overstated its income from operations,
goodwill, and total assets in its SEC filings, turning a net loss into income for financial statement
Sequential Brands Shareholder Alert - MarketWatch
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INVESTIGATION REMINDER: The Schall Law Firm Announces it is Investigating Claims Against Sequential Brands Group, Inc and Encourages Investors with Losses of $100,000 to Contact the Firm
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Yehuda Shmidman
In 2015 fashion house Sequential Brands Group acquired the Martha Stewart label, figuring the high-profile brand would give business a boost. It soon became clear internally that the boost wasn’t happening and Sequential would have to take a big loss, leaving officials at the company led by Chief Executive Yehuda Shmidman with a decision: Should they tell investors?
They chose not to.
Now the government is bringing the heat.
Last week the Manhattan-based company was sued by the Securities and Exchange Commission, which claimed the company made “materially false and misleading” statements. The government alleges Sequential executives knew soon after buying Martha Stewart that they would need to write down the company’s asset value by at least $100 million but “unreasonably” failed to do so.