Schawk revealed on 20 May that it had received a "Wells Notice" from the US Securities and Exchange Commission (SEC) indicating that the SEC could institute proceedings for alleged violations of certain federal securities laws.
The alleged breaches centre on the maintenance of accurate books and records and an adequate system of internal accounting controls. The Wells Notice relates to Schawk's 2008 restatement of its financial reports for its 2005 and 2006 fiscal years and the first three quarters of 2007.
Schawk, which is a global packaging pre-press specialist, was keen to point out that a Wells Notice is not "a finding of wrongdoing" but rather an opportunity for the recipient to respond prior to any decision on an enforcement proceeding by the SEC.
Robbins Umeda LLP announced its investigation yesterday (31 May) and said it would focus on whether Schawk's directors and officers had breached their fiduciary duties to shareholders by causing or permitting the company to issue false and/or misleading statements regarding its business and financial conditions and by failing to maintain a proper system of internal accounting controls.
According to the US-based shareholder rights litigation firm, Schawk's 2008 restatement was necessary because it had understated the development costs for software sold to third parties and for internal use, as well as problems with the timing of the recognition of revenue and costs at its digital solutions business.
