Sony May Face SEC Action Over Disclosure

Sony Corp. may soon be in trouble with the Securities and Exchange Commission stemming from possibly misleading public disclosures made to stockholders before the company posted a whopping $3.2-billion loss in 1994 on its film business, Sony acknowledged Thursday.

In SEC filings this week related to the offering of some bonds, Sony disclosed that the SEC’s enforcement division is considering recommending to the full commission that action be taken against the global electronics giant for allegedly making false and misleading public statements before posting the loss.

In the filing this week, Sony said the panel told Sony in December that it was considering such a recommendation. A Sony spokesman confirmed that the investigation is continuing and that no decision has been made, but he declined further comment.

In November 1994, Sony posted the loss, $2.7 billion of which came from a write-off of projects and settlements of contracts and various other legal claims.

Additionally, Sony posted other operating losses of about $510 million on its movie unit. Losses on such films as “Last Action Hero,” “Lost in Yonkers” and “I’ll Do Anything” accumulated during the regime of former Sony Pictures Chairman Peter Guber, who abruptly quit the company under pressure three weeks before the bombshell announcement was made. Guber had been hired in 1989 along with his then-producing partner, Jon Peters, who left the company in 1991.

Last year, Sony staged a comeback, setting a box-office record with such films as “Men in Black,” “Air Force One” and “My Best Friend’s Wedding.”

Sony said the notification came after an informal investigation, and that the action, if taken, would seek to show that Sony’s public disclosures were misleading in statements made about its fiscal year ended March 31, 1994, and its fiscal quarter ended June 30, 1994.

Specifically, Sony said, the SEC may attempt to show that the statements did not include key information about problems at its Sony Pictures Entertainment unit that were disclosed when Sony announced the huge loss.

Sony last June settled for $12.5 million a class-action lawsuit making similar allegations.