A report from the Wall Street Journal, citing “a person familiar with the matter,” indicates that the company has canceled its IPO roadshow and is “reassessing the timing” of the IPO, which was reportedly going to to happen “after Labor day”.

The SEC, according to the report, has also been questioning the company about a recently leaked internal memo from CEO Andrew Mason to employees geared at boosting employee morale in the face of negative media attention. All Things D posted that in its entirety here.

As others have noted, Wired had to pull its IPO after such a memo was leaked.

Groupon filed for a $750 million IPO in June.

Last year, Groupon turned down a $6 billion offer from Google, and now the competition is coming out of the woodwork, including from Google itself, though some competitors have eased up a bit (namely Facebook and Yelp).

The company lost $413 million last year.

Recent Hitwise data indicates that Groupon’s traffic declined by 50% this summer, while its closest rival LivingSocial’s traffic increased by 27%.

Peter Lattman reported, "The agency has sent information requests to several participants in the buying and selling of stock in these four companies, according to two people with direct knowledge of the inquiry who requested anonymity because they were not authorized to speak about it."

Then Lattman continued, "It is uncertain what exactly the S.E.C. is looking into, but several securities lawyers say it could relate to understanding the number of shareholders at these companies. . . .  If they had 500 shareholders, S.E.C. rules would require them to disclose their financial results to the public."

So an investigation that actually turned up something could force Facebook, LinkedIn, Twitter, and/or Zynga to go public.  At the same time, that evidence of wrongdoing would make it much more difficult for the companies to attract private investors.

Again, though, nothing’s been confirmed.  The only organization connected to this rumor to actually go on the record is SecondMarket, and it just told Dan Primack today that the SEC hasn’t been in touch.

We’ll be sure to report any significant updates.

The terms fall in line with the framework disclosed last month. Dell will pay a civil monetary penalty of $100 million.

The SEC has agreed to settle with both the company and Chairman and CEO Michael Dell. The settlement with Michael Dell still has to be approved by a U.S. District Court, but both the company and Dell entered into the settlements without admitting or denying the allegations.

Michael Dell’s settlement does not involve any of the separate accounting fraud charges being settled by the company and others. The company says his settlement is "limited to claims in which only negligence, and not fraudulent intent, is required to establish liability, as well as secondary liability claims for other non-fraud charges."

He has agreed to pay a civil monetary penalty of $4 million. The complete announcement is here.

The first can kick in if much more heel-dragging occurs, or more specifically, "if the conditions to commencement have not been satisfied by July 29, 2010."  Which is a nice sign that this won’t still be under discussion come doomsday.

Then, Yahoo’s been provided with some "outs" if the combination of it and Microsoft can’t financially keep pace with Google.  The S.E.C. filing states that "Yahoo! may terminate the Search Agreement if the trailing 12-month average of the RPS [revenue per share] in the United States of Yahoo! and Microsoft’s combined queries falls below a specified percentage of Google Inc.’s estimated RPS . . . or if the combined Yahoo! and Microsoft query market share in the United States falls below a specified percentage."

And there’s one more "specified percentage" RPS clause that’ll kick in at the five-year mark, too.

Onlookers who just want to see the dealings resolved may find the existence all of these provisions disheartening.  Yahoo supporters and shareholders may appreciate them, however, since they should help protect the company.

Upon his departure, Jobs wrote a letter to the Apple staff. In it, he wrote:

I am sure all of you saw my letter last week sharing something very personal with the Apple community. Unfortunately, the curiosity over my personal health continues to be a distraction not only for me and my family, but everyone else at Apple as well. In addition, during the past week I have learned that my health-related issues are more complex than I originally thought.

I have asked Tim Cook to be responsible for Apple’s day to day operations, and I know he and the rest of the executive management team will do a great job. As CEO, I plan to remain involved in major strategic decisions while I am out. Our board of directors fully supports this plan.

I look forward to seeing all of you this summer.

According to reports, Apple disclosed at its conference call that Jobs is feeling better, and will indeed be back with the company in June on a full-time basis.

The announcement of his leave of absence was quickly met with scrutiny from the Securities and Exchange Commission.

Steve Jobs let the world know and issued a prepared statement on Apple’s earnings.

Even in these economically challenging times, we are incredibly pleased to report our best quarterly revenue and earnings in Apple history,” the CEO said.

That’s to the tune of over $10 billion dollars. A big number for sure. Increased sales of Macs and iPhones led the charge in the fourth quarter but Apple is already advising that Q1 of this year may not be so great. Interestingly enough it’s not the business of Apple that is getting the most attention these days. In fact, it seems as if the great performance in otherwise dark days is an afterthought when compared to the news swirling around the health of Steve Jobs and the SEC’s interest in the whole situation.

Jobs is on a leave of absence until June of this year to work out some more complex medical concerns than the initially reported hormone imbalance that kept him away from MacWorld for the first time ever. There has been widespread speculation as to his health. Mr. Jobs is a pancreatic cancer survivor which in and of itself is amazing. Unfortunately, if you have ever dealt with a situation either personally or with someone close to you regarding cancer (which I have) it’s hard to feel like you are ever out of the woods.

Many feel that Steve Jobs IS Apple which is fair and unfair all at once. He is just one man but he has branded the company with his own image for so long that many people act as if he sits in his office and develops these products himself. Apple is a company of incredible minds and it often goes unmentioned amid the celebrity treatment of Jobs.

The SEC is concerned that the disclosures of Jobs’ health condition will affect investors’ ability to ‘predict’ what will happen to the company. Apple’s response was as expected:

In a conference call, Apple executives also sought to play down Mr. Jobs’s leave. “Apple will do extremely well” regardless of who is leading the company, said Tim Cook, Apple’s chief operating officer, who has assumed Mr. Jobs’s day-to-day duties while the CEO is away. Peter Oppenheimer, Apple’s chief financial officer, added that “Steve is the CEO of Apple and plans to remain involved in major strategic decisions.”

Personally, I wish we didn’t have to concentrate so hard on this poor guy’s health. I suspect that the increased scrutiny and the SEC digging into the situation (although no one knows how deeply yet) doesn’t help him recover any. I hope that for one moment today we can all take some time and pray for him (or whatever it is you do to wish him well).

What is your feeling about products and people and branding having the blurred lines like they do at Apple? Is it good to put too much on a person who could have health issues, a car wreck or something else that suddenly leaves a void that may or may not exist? If Steve Jobs were not able to return to Apple will the innovation stop? Hard questions for hard times and there are no right or wrong answers.

Comments

What would have happened otherwise?  Well, Spencer E. Ante states, "Under the Securities & Exchange Act of 1934, a private company must start disclosing financial results publicly once it has more than 500 stockholders and $10 million in assets.  It’s the same law that helped push Google to go public back in 2004."

So, without the SEC’s approval, Facebook might have either had to go public at a very inopportune time, or change its hiring and compensation procedures.

 

Facebook got something of a free pass, though.  After a law firm representing the company put together a 10-page document asking the SEC for an exemption, Anne Krauskopf, Senior Special Counsel, responded with 165 words.

To hit the highlights, she wrote, "Based on the facts presented, the Division will not object if Facebook, Inc. does not comply with the registration requirements of Section 12(g) of the Securities Exchange Act of 1934 (the ‘Exchange Act’) . . . .  This position will remain in effect until the earlier of (1) the date that Facebook, Inc. otherwise becomes subject to Exchange Act registration or reporting requirements with respect to any other class of its securities, or (2) the date of a Change of Control . . ."

Today’s front page of the Wall Street Journal features Cuban in his classic “I can’t believe that idiot referee just made that call against my team and I will have his head on a platter” pose. Are there any other pictures of this guy out there other them him pitching a hissy fit on the sidelines of an NBA game? His less than adult behavior has helped him ring up more than $2 million in fines during his tenure as the owner of the NBA’s Dallas Mavericks. Considering his wealth that is just ‘throw around’ money but still why couldn’t he just feed some hungry kids rather than acting like one.

It appears that his impetuous nature has garnered him the 2 words that may actually be worse than ‘IRS audit’ and those are ‘SEC investigation’. Yikes, aren’t there usually big fines and jail time associated with those things? All of this stems from a 6% stake in Mamma.com which was sold by Mr. Cuban following some information that was given to him by the company’s CEO, Guy Faure. The details seem to be many but the one that stands out is the arrogance of this guy and his handlers. His lawyer, Christopher Clark had this to say:

We’re shocked. We find it incredible that with all the important issues that the SEC has to address with regards to today’s economy they’ve sought to bring a $750,000 case relating to a he-said, she-said about one trade against a person whose integrity has never been questioned before with regard to the securities markets.

Funny how he needed to qualify how Mr. Cuban’s integrity has never been questioned about the securities markets because it is questioned everywhere else due to his childish antics. Granted, the details seem a bit sketchy and the case may be one that doesn’t deserve this kind of attention but this guy thrives on attention. In his case, is online reputation monitoring or any type of reputation monitoring needed because nothing is secret with him? At what point does the persona end and the person begin? It will be interesting to see if this dings Mr. Cuban in any way since he has recently suffered some embarrassment about publically stating his desire to buy the Chicago Cubs but apparently not being able to raise the money he said he could.

So what’s the internet marketing angle? I would say it’s more of an internet angle in general. You need to be careful about what you put out there at any level because people are watching. Attitudes and actions are now monitored at a level unheard in modern times. I suspect that Mr. Cuban should have taken the more relaxed attitude he displayed on his blog last summer when he wrote:

Is there anything more fun than sitting around, growing your hair, drinking a Bud while listening to Jethro Tull and pondering how to change the balance of power in the search world and unseat Google?

Uh, Mark? This is reality checking in with you. Unseating Google appears to be the least of your concerns (and probably pretty far removed from reality). Maybe a few less alleged insider trading moves and some time off to try to exhibit some good behavior would be better?

Comments

For example: Cuban’s relative silence appears to be a taking-the-advice-of-his-lawyer situation.  On Cuban’s blog, an official statement appeared, and the name of Ralph C. Ferrara, co-chair of the Securities, Mergers and Acquisitions, and Corporate Governance Litigation Practice Group for the Dewey & LeBoeuf law firm, is at the bottom.

 

Ferrara once served as General Counsel of the SEC, and has argued cases five different times in front of the Supreme Court, so Cuban looks to be well represented.

Also, the guy who’s been known to shout at refs and dance on national television hasn’t been kept from proclaiming his innocence.  In the statement, Cuban said, "I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned.  The government’s claims are false and they will be proven to be so."

Approximately 440 comments then follow the announcement, so Cuban appears to both be in a considerable spotlight and have a lot of supporters.  Just don’t count on hearing much more from his side of things in the near future.

 Mark Cuban

Chronologically, the SEC’s complaint starts with Cuban’s purchase of 600,000 shares of Mamma.com in March 2004.  This was equal to a 6.3 percent stake.  Mamma.com then decided to conduct a PIPE ("private investment in public equity") offering, and its CEO contacted Cuban on June 28th.

According to the SEC, "Cuban agreed that he would keep whatever information the CEO intended to share with him confidential.  The CEO, in reliance on Cuban’s agreement to keep the information confidential, proceeded to tell Cuban about the PIPE offering.  Cuban became very upset and angry during the conversation, and said, among other things, that he did not like PIPEs because they dilute the existing shareholders.  At the end of the call, Cuban told the CEO ‘Well, now I’m screwed.  I can’t sell.’"

 Securities and Exchange Commission vs. Mark Cuban

But – according to the complaint – Cuban sold 10,000 shares the same day, and unloaded the other 590,000 on June 29th.  The SEC also notes, "Unless enjoined, Cuban is likely to commit such violations again in the future."

This situation is similar to the one in which Martha Stewart found herself not too long ago.  So far, though, the SEC is only asking that Cuban pay a "civil monetary penalty."  And although Cuban didn’t immediately respond to an emailed request for comment, the most recent sports-related post on his blog is titled "I Hate to Lose."