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SEC Puts Footstar on Notice for Civil Action

Footstar had disclosed in Nov. 2002 that its management had discovered discrepancies in the reporting of its accounts payable balances, after which the SEC launched its investigation.Discount footwear retailer Footstar (Nasdaq: FTSTQ) today said it has received a Wells notice from the SEC in connection to enforcement proceedings into the Mahwah company”s restatement of financial results from 1997 through 2002. Footstar operates the Meldisco departments nationwide in Kmart and Rite-Aid stores, where it also distributes its own Thom McAn brand of shoes.

Footstar had disclosed in November 2002 that its management had discovered discrepancies in the reporting of its accounts payable balances, after which the SEC launched its investigation.

The Wells notice states that the U.S. regulatory agency is considering recommending civil injunctive action against Footstar for alleged violations. A Wells notice intended to communicate that the SEC has made a preliminary decision to recommend imposing a civil or administrative action. Footstar stock sank $0.18 to $4.45 in late morning trading.