WASHINGTON-The Securities and Exchange Commission said it settled its investigation of Motorola Inc., determining that the company’s director of investor relations did violate disclosure regulations, but did so under direction from the company’s legal counsel. The SEC said that since the legal advice was sought and given in good faith that the company therefore wouldn’t face fines or enforcement action.
The SEC investigation stems from calls the company’s director of investor relations made to select industry analysts, warning them that the company’s public statement of “significant” sales declines actually meant drops of 25 percent or more. Motorola’s IR director first consulted the company’s legal counsel before making the calls to ensure the move was legal.
The SEC said that the legal advice was “demonstrably incorrect” and that the information privately given by the IR director was important and material and that Motorola’s use of “significant” was not clear enough.
The news comes as the government has been working to crack down on corporate practices in the wake of accounting scandals at Enron and WorldCom.
