Business continues to get better on the margin as JCP regains share from KSS and the other retailers who benefitted from it writing a $4.3bn check to competitors. Fundamentally, Nothing's Changed: What's changed with this story fundamentally? Nothing.With all of that happening at the same time - it seems to us that requesting information about financing and liquidity seems like a prudent fiduciary move by any regulator. To top it off, it was at a time when the company had yet to show any operating improvement whatsoever and the 'going to zero' call still carried some weight. That was within two weeks of JCP announcing its equity deal, which subsequently took the stock down 26% by the inquiry date and sparked several shareholder lawsuits. Timing Matters: Consider the timing on this one…though it is only being disclosed now, the inquiry happened on October 7th - that's almost two months ago.In fact, we'd challenge anyone to find any three companies (you can probably find one) in the S&P that have never unexpectedly been subject to a request for information by either a federal or state regulator. We're Not Dismissing It, But This is Routine: Regulators ask for information all the time.But there are some major factors to consider…
We'd never in a million years chalk it up as a non-event. First off, let's just state up front that we take any SEC inquiry very seriously. Here's our take on JCP's volatility over the past two days - specifically its' announcement that it received an inquiry from the SEC about its liquidity and recent equity offering.
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