Oh, and by the way…

Buried at the end of a fairly long list of lawsuits in the legal proceedings section in the 10-Q that Diebold (DBD) filed yesterday was this little gem:

The company was recently informed that the SEC’s inquiry now has been converted to a formal, non-public investigation.

Given that the company just disclosed the existence of an informal investigation in the Q that it filed in early May, the SEC seems to have wasted little time switching to a formal investigation, which gives them subpoena powers. What are they looking for? Diebold provides few details, other than that it has to do with revenue recognition, which leaves a lot of room for interpretation. There’s also the question as to why Diebold, given the number of lawsuits it is already facing, would choose to wait until it filed its second quarter Q to disclose the formal investigation. After all, a quick search of the filings shows that they managed to file 11 8K’s since the beginning of the year. Would investors really blanch at the sight of another one?