Shares of Sunbeam Corp. dropped as much as 27% on Monday as news surfaced of an informal inquiry by the Securities and Exchange Commission into possible irregularities in the appliance maker's accounting practices.
The move came about a week after Sunbeam's board fired Albert Dunlap as chief executive because of lagging sales and poor stock performance. The company had hired Dunlap, nicknamed "Chainsaw Al" for his penchant for cutthroat job-slashing, in 1996 in hopes he could turn around the company.
The household appliance maker's shares plunged as low as $8.19 on Monday, before falling $2.44, or 22%, to close at $8.81 on the New York Stock Exchange.
The SEC's inquiry into the company is designed to determine whether there is sufficient reason to initiate a full-blown investigation, said a person familiar with the matter, speaking on condition of anonymity. The informal inquiry was first reported by the Wall Street Journal on Monday.
Maureen Bailey, a spokeswoman for Delray Beach, Fla.-based Sunbeam, declined to comment.
SEC spokesman Christopher Ullman and David Levine, an aide to SEC enforcement director Richard Walker, would neither confirm nor deny any inquiry. Experts noted, however, that the market watchdog agency generally follows up on major complaints about companies by their shareholders.
Several lawsuits filed by Sunbeam shareholders have accused the company of failing to adequately disclose promotions of barbecue grills and other products that may have artificially inflated sales. And a recent article in the weekly financial publication Barron's suggested that accounting gimmicks were responsible for the company's strong 1997 earnings. The company has denied that its accounting practices were improper.
Bailey said Sunbeam "is confident that its numbers are proper" under accounting rules. She noted that the company's accountant, Arthur Andersen & Co., has stood by the figures.