SEC investigations are like colonoscopy's.....
They may not find anything major but the entire process is nonetheless not exactly a 10 on the enjoyment scale of life.
My main concern is that if GTE can claim today that it is essentially innocent of Amex's allegations, that it is fully coooperating with internal and external audit investigations, then why wasn't the Amex in the first place convinced of GTE's detailed assertions as to its innocence? Somewhere between these two parties there obviously was a disconnect and a radically different perspective of the issues.
The SEC is being brought in because the Amex is ethically required to notify them if they discover what in their estimation is a violation of securities law. To protect themselves from negligence and defacto co-violation they had no choice but to bring in the SEC.
The underpinnings of an SEC investigation is to initiate discovery. They are relying on the Amex' panel determination that there's something amiss to discover. I subsequently seriously doubt that the Amex would arbitrarily place GTE in this position without some hard-core evidence to support the allegations.
So the bottomline reality here is that GTE will most likely be found guilty by the SEC on some but not necessarily all of the Amex' findings. The question will ultimately be how serious are the infractions, and how will they affect GTE from executing on its objectives.
I have an inkling based upon certain individuals past actions associated in dealing with ADGI prior to it becoming GTE that the SEC will primarily focus upon these individuals. My gut tells me these same individuals are at the root of GTE's most serious troubles today in some form or fashion. Let us hope that the officers at GTE were unaware of such dealings and that principally the CEO under SOX is found unaccountable.
If the infractions are found to be purely administrative in nature then this SEC exam will eventually go away. If not, be prepared for the worst. In essence, the SEC will focus hard on first uncovering criminal infractions. If you don't hear of anything to that regard from the onset then most likely what's left will be correcting administrative processes. IMO, GTE can survive those.
R
AI
