Groupon may face SEC probe over earnings revision
Regulators are reviewing daily deals site's financial restatement and may launch formal investigation, a source tells The Wall Street Journal.
Groupon's revision of its first set of financial results as a public company has apparently attracted the attention of federal regulators.
The U.S. Securities and Exchange Commission is examining last week's announcement but hasn't decided whether to launch a formal investigation, an unnamed source familiar with the situation told The Wall Street Journal.
Groupon representatives declined to comment on the report.
The daily deals site said in a regulatory filing Friday that it had discovered "material weakness" in internal controls over its financial statement and that its fourth-quarter results were worse than previously stated because of higher refunds to merchants. The revisions increased its net loss for the fourth quarter by $22.6 million and reduced revenue for the quarter by $14.3 million to $492.2 million.
The news did not sit well with investors, who sent shares of the Chicago-based company down nearly 17 percent today to close at $15.27.
Groupon has a rocky history with its book keeping. An SEC review of Groupon's accounting procedures forced the daily deals provider to revise its IPO filing papers last year after the company reported that it generated $713.4 million in revenue in 2010, while the SEC said that the figure should be $312.9 million.
Groupon CEO Andrew Mason admitted during an interview with "60 Minutes" that the error was a "bush-league mistake."