Spruce Point Capital Management To Issue A Forensic Investigation Report Tomorrow
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Forensic Investigation Report: A Company Covering Up Multiyear Margin Pressures
Spruce Point is pleased to announce it will issue a critical forensic investigation report tomorrow morning on benchmark US company that we believe has been covering up multiyear margin pressures in its business. After years of slowly curtailing key disclosures and pulling numerous levers to portray growth, we believe COVID-19 was the body blow that tipped the scale towards management now manipulating the accounting, obscuring its true debt load, and favoring short-term decision making to placate Wall Street at the expense of long-term competitiveness and earnings potential. Management has tried hard to convince investors to ignore certain key accounts, but our report, backed by key interviews of former employees and industry experts, will force management to address its business pressures, accounting imbalances, and dubious financial presentation methods.
Investors should take little comfort that the Company's Audit Committee is financially sophisticated enough to identify the problems. We observe that its former Audit Chairman, and current tenured committee member, has been associated with three companies coming under SEC investigation. This is not easily apparent from his public biographies. In two of the cases, the SEC's focus was on similar issues to those we've identified, and required multiyear financial restatements. In addition, he currently omits from his biography his current Board role at foreign public company that connects him to a colleague who settled a U.S. corruption scandal and another executive whose company is currently under investigation by the SEC, for yet again, similar accounting issues to those we've identified.
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