Investigations Looking At MDC Partners' Potential Financial Wrongdoing Multiply

MDC Partners continues to experience fallout from news that the advertising holding company is under investigation by the U.S. Securities & Exchange Commission for financial irregularities.

Numerous law firms, including Pomerantz LLP, The Rosen Law Firm, Johnson & Weaver, Wolf Popper LLP, and Block & Leviton LLP, are launching investigations into potential securities fraud by the Toronto-based holding company. The firms are taking their cue from MDC’s disclosure late Monday that the SEC began asking the company in October for documents related to its expense documentation and other accounting procedures as well as documents related to trading in the stock by third parties.

Company CEO Miles Nadal has already agreed to give back to the company $8.6 million in payments he received for expenses that were red-flagged by the SEC investigation. MDC, which said Monday it has been cooperating fully with the SEC investigators, has also removed Michael Sabatino from the chief accounting officer post --- for now he is working on unspecified “special projects,” while CFO David Doft takes on added duties as lead accounting executive. Sabatino had been in the CAO role since joining the company in 2005.



The company, which is the parent company of agencies including CP+B, 72andSunny and KBS+P, also said it has revised certain corporate policies as a result of the SEC investigation, which is ongoing and in its “early stages” for certain phases of the inquiry.

The law firms launching their investigations seek to represent investors nationwide in potential legal actions against MDC and certain of its officers and/or directors. Potential issues, they say, are whether the company and certain of its officers and directors have violated Sections 10(b) [an antifraud provision] and 20(a) [a liability provision] of the Securities Exchange Act of 1934 and if the company issued materially misleading business information to the investing public about its activities.

Ultimately, these lawyers are hoping to prepare class-action lawsuits to recover losses suffered by MDC Partners investors. MDC's stock price stabilized Wednesday -- the stock rose 8.22% closing at $21.86 -- after plunging nearly 30% on Tuesday following the disclosure of the investigation by MDC on Monday after the markets had closed.  

2 comments about "Investigations Looking At MDC Partners' Potential Financial Wrongdoing Multiply".
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  1. Helen Shelly from Denver Real Estate Agent, April 30, 2015 at 1:09 a.m.

    I Like this post..

  2. Jonathan Hutter from Northern Light Health, April 30, 2015 at 11:09 a.m.

    "Greed is good." Exceptin iffin you get caught.

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