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Office Depot: Taking care of (analysts’) business …

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News of the $1 million settlement Office Depot (ODP) has entered into with the Securities and Exchange Commission came with something of a wave of nostalgia for us here at the footnoted global campus. The feds, of course, accused the office-supply giant of giving analysts a wink and a nod in 2007 to let them know to adjust earnings expectations downward, a violation of federal disclosure rules.

Others (including The New York Times and the Financial Times) have done a good job of laying out the details, and noting how this could indicate a new regulatory push targeting not just company officials who tip off select investors and analysts, but their ultimate bosses. But the cozy relationship between the office-supply giant and analysts, of course, brings to mind Michelle’s post last year about a joint federal investigation by three agencies into the company’s pricing practices — and the fact that the disclosure didn’t seem to come up in an analyst call at the time.

In 2008, Michelle noted the apparently casual departure of former Chief Financial Officer Patricia McKay even as the company disclosed disappointing results and a formal SEC inquiry into “our contacts and communications with financial analysts during 2007,” among other issues.

Some of those other issues — which included “inventory receipt, timing of vendor payments, certain intercompany loans and the timing of recognition of vendor program funds” — also surfaced in the SEC complaint filed with yesterday’s settlement. And sure enough, there’s McKay in the mix as well: She settled SEC allegations along with the company, as did current Chief Executive Stephen A. Odland; each agreed to pay $50,000. (A slap on the wrist, notes CNNMoney’s Colin Barr.) As usual in these kinds of settlements, Office Depot, McKay and Odland settled without admitting or denying the agency’s allegations.

It wasn’t the first time McKay landed on footnoted’s radar. In August 2005, we highlighted her financially rewarding cross-country job-hopping from California to two gigs in Florida, and the sweet relocation benefits and raises she collected in the process.

Red flags on pay and governance won’t necessarily dog every problem company, or predict precisely when the fallout will hit. But investors take real risks by ignoring them altogether.

Image source: chrisdlugosz via Flickr

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