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More lumps of coal at UT Starcom?

It’s been awhile since we last checked in on UT Starcom (UTSI), but when we saw the 10-K that the company filed earlier this week (as well as a Q), we saw that the stock has declined nearly 90% since we last footnoted the company. In addition to the filings, the company also announced on Wednesday that it was reducing its headcount by 11%, or roughly 700 employees.

But disgruntled employees seem like the least of their problems. Ditto for the formal SEC investigation that’s been ongoing since September 2005 or the Department of Justice Investigation that dates back to December 2005 that is looking into violations of the Foreign Corrupt Practices Act. All of that, while worrisome, is old news. That’s because in the K that they filed, the company added this new language to their legal disclosures:

These inquiries could harm relationships with existing customers and our ability to obtain new customers and partners. If the SEC or the DOJ makes a determination that we have violated federal laws, we may face sanctions including, but not limited to, fines, disgorgement and an injunction. Additionally, such a determination by the SEC or the DOJ could adversely affect our business, results of operations, financial position and cash flow, and ultimately our stock price.

Of course, given what’s happened to the stock price so far, you have to wonder why this sort of warning was missing before.