Government scrutiny of Sunrise Senior Living intensified last week when the McLean, Va.-based senior-care provider announced that the Securities and Exchange Commission commenced a formal investigation of the company.
The news followed the SECs December 2006 request for information about insider stock sales, timing of stock option grants and matters related to Sunrises historical accounting practices. The company said the initial request came after the media called attention to these issues raised in a letter sent to Sunrise by the SEIU Master Trust, the national pension fund for the Service Employees International Union. A Sunrise shareholder, the SEIU Master Trust last week called on Sunrises board to remove its outside directors and replace them with truly independent directors who have the range of abilities and experiences necessary to rectify the companys leadership problems.
But according to a research note from financial services firm Stifel Nicolauswhich provides services to Sunriseanalyst Jerry Doctrow and associate analyst Dan Bernstein said given the lack of new disclosures from the company, most investors see the SEC investigation as a logical outgrowth of its prior inquiry rather than a sign someone has found a smoking gun at Sunrise. Stifel Nicolaus maintains its Hold rating on Sunrise.
When asked what effect the formal probe might have on the companys ongoing financial investigation, Lisa Mayr, vice president of investor relations at Sunrise, declined to comment.