BOSTON, May 15, 2014 /PRNewswire/ -- Block & Leviton LLP (www.blockesq.com), a Boston-based law firm representing investors nationwide, is investigating possible securities law violations by Prospect Capital Corporation ("Prospect" or the "Company") (NASDAQ: PSEC) following the Company's announcement that it has drawn the scrutiny of the Securities and Exchange Commission ("SEC") regarding its accounting practices. Specifically, the SEC has challenged the accounting for subsidiaries and whether the Company must consolidate its subsidiaries in order to be in compliance with Generally Accepted Accounting Principles ("GAAP").
On May 6, 2014, the Company filed with the SEC its Form 10-Q for quarter ended March 31, 2014, wherein it stated that the Company may be required to restate its "prior financial statements with certain wholly-owned companies consolidated for financial statement purposes but not for tax purposes." If such restatement is necessary, the restatement would "decrease [the Company's] historical net investment income by the amount of interest and structuring income paid by such wholly-owned companies in excess of the amount of income that can be reported as dividend income based on taxable earnings and profits." Essentially, by under-consolidating its subsidiary holding companies, the Company appears to have improperly inflated the dividend income it was able to report. The loss of this benefit will adversely affect the Company's financial results.
The value of Prospect shares has dropped almost 10% following the May 6, 2014, announcement, a collapse which has cost shareholders, in the aggregate, nearly $300 million.
If you purchased Prospect securities that have been affected by the Company's recent announcements and have any information relevant to this investigation, or you have questions about your legal rights, please contact attorney Steven P. Harte of Block & Leviton LLP at (617) 398-5600 or email him at Steven@blockesq.com. Whistleblowers are also encouraged to contact attorney Harte, and the confidentiality of all communications is assured.
Block & Leviton is a Boston-based law firm representing investors nationwide for violations of securities laws. The firm's lawyers have collectively been prosecuting securities cases on behalf of investors for over 70 years.
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Contact: BLOCK & LEVITON LLP Steven P. Harte, Esq. (617) 398-5600 Steven@blockesq.com
SOURCE Block & Leviton LLP