Penn Traffic reaches settlement with SEC after scrutiny for accounting practices

SYRACUSE, N.Y. Penn Traffic has announced that it has reached a settlement with the Securities and Exchange Commission, concluding the SEC’s investigation into the company’s accounting practices and policies before its emergence from bankruptcy in April 2005.

The investigation had focused on practices and policies relating to promotional allowances at the company from fiscal 2001 through fiscal 2003, as well as those of its subsidiary Penny Curtiss bakery from fiscal 2000 through the first quarter of fiscal 2003.

Without admitting or denying the SEC’s allegations, the company agreed to settle the charges by consenting to a permanent injunction against future violations of federal securities laws. The SEC did not impose fines or monetary penalties.

As part of the settlement, Penn Traffic will hire an independent examiner who will provide annual reports to the SEC, the United States attorney for the Northern District of New York and the company?s board relating to its promotional-allowance internal controls and financial reporting. The examiner will serve for three years.

“The company has worked hard to address a number of legacy issues so Penn Traffic’s resources and attention can be fully dedicated to our customers, our stores and our operations,” senior vice president and general counsel Daniel Mahoney said in statement. “One of the legacy issues facing the company was this SEC investigation, so the settlement is another important step in the right direction.”