The SEC announced enforcement actions on October 21, 2010 against Office Depot, Inc., CEO Stephen A. Odland, and former CFO Patricia A. McKay alleging violations of Regulation FD. The SEC claims that Odland and McKay placed direct calls to individual analysts with the goal of persuading the analysts to revise their analysis of Office Depot's expected financial performance. They are not alleged to have directly told the analysts that Office Depot would miss its forecasts, but instead to have "signaled" this message by referencing recent public statements of similarly situated companies concerning the impact of the economy on earnings and reminding the analysts of Office Depot's previous cautionary statements. In response to the calls, analysts revised their forecast downward.
Office Depot agreed to settle the charges and pay $1 million in penalties. Odland and McKay also agreed to settle the charges levied against them. Each will pay $50,000 in penalties and agreed to cease and desist from any future violations. All of the parties agreed to the settlement with the SEC without admitting or denying the findings and allegations.
In addition, the SEC charged Office Depot with unrelated accounting violations. The SEC alleged that Office Depot overstated its net earnings from the third quarter of 2006 through the second quarter of 2007. In November of 2007, Office Depot restated its financial statements due to premature recognition of funds from vendors. Office Depot agreed to settle these accounting claims by consenting to cease and desist from future violations without admitting or denying the findings and allegations. No monetary penalty was involved in this settlement.