World Surveillance Group Inc (fka WSGI)

[imawswami]

Wells-last stage of investigation?-Article


Please note: This post is not a recommendation to buy, hold, or sell this security but represents an honest attempt (although i will be the first to say at times ignorant attempt) to share information regarding events surrounding this company. Whether it's internet info on TAO T. or even the Well's, if it's on the 'Net and relevant, many of us share it here. Am no different.

Here is a look at another company (NYSE) IPG, who recently faced a Well's Notice -one that grew out of a formal investigation leading to restatements.

On 6-14-07 IPG received the Wells. The company's comment on the Notice in the Press Release (see below) reads:

"Under recently revised settlement procedures, such a notice is now a prerequisite to settlement negotiations with the Commission staff."

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IPG News Release 6-14-2007
The Interpublic Group (IPG) Receives 'Wells Notice' From SEC
06-14-2007 08:33:32 AM

The Interpublic Group (NYSE: IPG) announced a development in the investigation being conducted by the staff of the Securities and Exchange Commission (SEC) into the Company's restatements announced in 2002 and 2005.

The company has received a "Wells notice," which invites the company to make a responsive submission before the staff makes a final determination concerning its recommendation to the Commission. Under recently revised settlement procedures, such a notice is now a prerequisite to settlement negotiations with the Commission staff.

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Article on Well's Notice faced by IPG

http://www.cfo.com/article.cfm/9349685/c_9337702?f=TodayInFinance_Inside

Today in Finance for June 14, 2007

Interpublic Slapped with Wells Notice

The advertising giant says that new SEC procedures may mean a settlement is close at hand.

Stephen Taub, CFO.com
June 14, 2007
Officials at advertising and marketing giant The Interpublic Group said the company received a "Wells Notice" from the Securities and Exchange Commission related to corporate restatements announced in 2002 and 2005. The Wells Notice invites the company to respond to SEC's charges before the regulator’s staff makes its final recommendation to commissioners regarding whether to take action against the company.

Interpublic officials noted that under recently revised settlement procedures, such a notice is now a prerequisite to settlement negotiations with the commission staff. "Given our understanding of new procedures at the SEC, this development is not unanticipated and we believe that it moves us a step closer to resolution in this matter," said Interpublic Chairman and CEO Michael I. Roth, in a statement. He emphasized that the company has been cooperating with the commission since the outset of its investigation in 2002.

In 2002, Interpublic announced a restatement, and two amended restatements, within a four-month period related to financial reports released between 1996 through June 2002. When the dust settled, the total restated amount rose to $181.3 million, roughly triple its initial estimate. The adjustments were related to an investigation into the billing practices at its McCann-Erickson unit.

By January 2003, the SEC launched a formal probe into the matter. Then, in March 2005, Interpublic announced that it would miss the filing deadlinefor its 2004 annual report, noting at the time that it might have to restate its results, yet again. The company attributed the filing delay to material weaknesses in internal controls, including the documentation and control of the financial-results reporting process, and the extra time needed to complete management's report as required by Section 404 of Sarbanes-Oxley.

The company disclosed in a regulatory filing that the most significant matters concerned acquisitions completed between 1996 and 2001, for which the company may have improperly consolidated the results of acquired companies. At the time, Interpublic noted that while it was at the early stages of the review, its preliminary assessment had concluded that about $145 million in revenue and $25 million of net income may have been improperly recognized during the six year span.

Further, officials warned that several other matters might also require the restatement of prior results. As it turned out, Interpublic announced in September 2005, that it would restate its financial results for the years 2000 through 2004 after discovering accounting errors as well as evidence of "possible employee misconduct."

"In all cases, culpable employees have been terminated or are in the process of being terminated or are otherwise no longer with the company," it stated in a regulatory filing. Company officials also conceded in the filing that the company did not have adequate procedures in place for the review of customer contracts by its finance groups around the world. In addition, the company lacked adequate procedures related to the treatment of various types of vendor credits, discounts, differences between vendor prices and client cost estimates, and duplicate customer payments.

"Without adequate procedures the operating practice and the accounting in some of our agencies, predominately outside the United States, relied on local customs and practices," reported a regulatory filing. "As a result, in some instances, we were inconsistent with the underlying contractual requirements, which necessitated an accounting adjustment. In other instances, the timing of revenue recognition did not consistently follow the customer contract." The company added that the restatement also affected periods prior to 2000.

In its announcement on Thursday, the company reiterated that no current senior manager within the operating units, or in the corporate group, acted inappropriately with respect to the 2005 restatement. The company also said that that it has reserved against media and vendor credits that were connected to the 2005 restatement, and is currently working to resolve those matters directly with its clients.

It added that the shortcomings in the company's control environment that led to the 2002 restatement to address imbalances in intercompany accounts did not involve the misuse of client funds.