Report: SEC Examines Groupon's Surprise 4Q Revisions
Maybe Groupon (NASDAQ:GRPN) needs to start offering daily deals for dealing with the Securities and Exchange Commission.
In the latest headache for the daily deals site, the SEC has opened a preliminary probe into Groupon’s surprise decision to downwardly revise its first financial results as a public company, The Wall Street Journal reported.
Shares of Chicago-based Groupon plummeted almost 17% and tumbled below its $20 IPO price on Monday in response to the company slashing its fourth-quarter revenue and deepening its loss due to higher-than-expected refunds.
The SEC has yet to decide whether to launch a formal investigation into the revisions, the Journal reported. The revisions are under greater scrutiny as Groupon was twice forced to adjust its finances before going public amid SEC pressure.
Despite all of the accounting headaches, Jason Child, Groupon’s finance chief, continues to have the support of CEO Andrew Mason, the Journal reported.
The need to downwardly-revise results came after Groupon’s chief accounting officer told Mason and Child that many customers refunded their coupons in January, the paper reported.
Underscoring the accounting issues, Groupon also said on Friday it has a “material weakness in its internal controls."
To deal with the financial headaches, Groupon has hired KMPG as a second accounting firm and also plans to hire more accounting and finance staff, the Journal reported.
Shares of Groupon failed to muster much of a rebound Tuesday, inching up just 0.2% to $15.30 at the open. They have tumbled more than 25% year-to-date.