Was “Jimmy Connors’ new hip” late to the party?
Yesterday, Wright Medical (WMGI), a company best known for replacing Jimmy Connors’ hip, issued this three-sentence 8K noting that the SEC was now conducting an “informal investigation regarding potential violations of the Foreign Corrupt Practices Act”. The next sentence went on to say that Wright understood that “several other medical device companies have received similar letters”.
On the surface, the 8K seemed downright refreshing. After all, lots of companies never bother to address an informal investigation. But a quick skim of some of Wright’s competitors (as defined by Google Finance) shows that Wright appears to be pretty late to the party.
That’s because of the six companies with market caps of over $1 billion — Wright’s is listed at $1.1 billion — three have already disclosed similar investigations. The first to disclose the potential problem was Zimmer Holdings (ZMH) in this 8K filed on Oct. 11, 2007. Stryker (SYK) followed with its own disclosure nearly a month later. The third competitor to come clean — Smith & Nephew (SNN) waited until the 20F it filed on March 27, 2008 to disclose the issue, but gets points for providing the most information:
In September 2007 the United States Securities and Exchange Commission (SEC) wrote a letter to the Group advising that it was conducting an informal investigation into certain marketing practices in the Group’s orthopaedics reconstruction business in Germany, Poland and Greece with reference to the United States— statute known as the Foreign Corrupt Practices Act. The Group believes that several of its major US competitors have received a similar letter.
Now maybe Wright wasn’t part of that initial inquiry back in September. But if they were, why did they wait until June 10 to put out the 8K?