WASHINGTON (Legal Newsline)
— Portugal Telecom SGPS S.A. will pay a $1.25 million fine after allegations it
failed to properly disclose credit risk in its investments and debt instruments
issued by companies of Portuguese conglomerate Grupo Espirito Santo, the
Securities and Exchange Commission (SEC) has announced.
The SEC found multiple
disclosure failures on the part of Portugal Telecom in its 2013 financial
statements. It allegedly did not properly disclose the nature and extent of
credit risk to investors. The company’s investors were, therefore, unable to
develop an overall view of the situation during the company’s investment in
Grupo Espirito Santo. Further allegations point to Portugal Telecom
mischaracterizing its short-term investment in commercial paper issued by a
Grupo Espirito Santo company.
“Credit risk is material
information for investors, and Portugal Telecom failed to ensure that the risks
of its Grupo Espirito Santo-related investments were fully and accurately
disclosed in its public filings,” said Michele Layne, director of the SEC’s Los
Angeles Regional Office.
Without admitting to or
denying the findings, Portugal Telecom agreed to pay the $1.25 million penalty.
Janet E. Moser handled the case for the SEC, supervised by Victoria A. Levin of
the Los Angeles office.