Abercrombie Reveals SEC Inquiry

Abercrombie & Fitch Co. said Friday the Securities and Exchange Commission is investigating the clothing retailer’s release of a sales forecast last month and that a company executive has been placed on a leave of absence.

The SEC inquiry follows reports that an Abercrombie executive warned one analyst about a sales forecast before it was announced to the public.

“The SEC is conducting an informal inquiry, and the company is fully cooperating,” said Roanne Kulakoff, an outside spokeswoman for the Reynoldsburg, Ohio-based company. In an informal inquiry, the SEC seeks testimony and documents without using a subpoena.

Abercrombie investor-relations director Lonnie Fogel was told to take a leave of absence “because of this episode,” Kulakoff said. Fogel is the only Abercrombie executive to be put on that status, she said. Fogel didn’t respond to phone messages left at his home.

The SEC inquiry represents a rare agency probe of so-called selective disclosure, in which company insiders are alleged to have provided potentially market-moving information to favored analysts or institutional investors before the news is released to the investing public.

Few such cases have been brought because selective disclosure charges must surpass a difficult legal threshold, said SEC Deputy General Counsel Meyer Eisenberg.

The commission has to show that a company insider profited financially or “reputationally” from the disclosure, said Eisenberg, speaking in general terms and not specifically about Abercrombie or any other inquiry.

News organizations, citing unidentified people familiar with the matter, reported last month that an unnamed Abercrombie executive warned Lazard Freres & Co. analyst Todd Slater of sluggish fiscal third-quarter sales on Oct. 8--five days before the company made the forecast public.

Slater declined comment Friday, as did a Lazard spokeswoman.

The Abercrombie inquiry is being pressed as Securities and Exchange Commission Chairman Arthur Levitt campaigns against selective disclosure.

The commission is preparing to propose a rule in the next few months that would require a company to tell the public before, or at the same time, that it notifies analysts and institutional investors of information likely to affect its stock price.

Abercrombie shares closed down 19 cents at $27.25 on the New York Stock Exchange. News of the SEC probe came after the markets closed.