Penthouse Is Focus of SEC Investigation

Penthouse International Inc., publisher of adult magazines since 1965, said U.S. regulators opened an investigation of its accounting three weeks before the company sought bankruptcy protection for its publishing unit, General Media.

The company said in a Securities and Exchange Commission filing that the SEC informed it July 23 that an inquiry was being raised to a formal probe. Penthouse said the investigation relates to its financial statements for the first quarter of this year and for all of 2002. The SEC also is examining its accounting for a Web site management agreement, as well as auditing services in 2002 and 2003.

Penthouse shares were unchanged at 68 cents in over-the-counter trading.