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.