Connecting the dots…

January 16, 2004

Ikon Office Solutions (IKN) has decided to expand its board from 8 members to 12 members. But in its proxy filed yesterday, it discloses that one of those new board members, Gerald Luterman, is the subject of a formal SEC investigation. Luterman, who currently serves as CFO for KeySpan Corp. (KSE) , is being investigated along with “certain company insiders” in KeySpan’s parlance for insider trading dating back to May 2001 — 2 1/2 months before KeySpan announced it was taking a special charge and lowering 2001 earnings estimates, which prompted a sharp decline in its stock. KeySpan, however, has never identified Luterman by name in its SEC filings, even though The Houston Exploration Co. (THX) , another company Luterman is a director of (and which KSE is the majority shareholder in), has been disclosing this in its SEC filings since April 2002, a month after the SEC launched its formal inquiry. Now if you’re a KeySpan investor, wouldn’t you want to know that your CFO was the target of a formal SEC investigation? Ikon gets credit for disclosure here, but you have to wonder whether there’s no other qualified board members other than one being investigated by the SEC.

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