Is ZAGG The Target Of An SEC Investigation?

 |  About: ZAGG Inc (ZAGG)
by: Worthless Pennies

Back in June of this year I filed a Freedom of Information Act (FOIA) request with the SEC. The FOIA act allows citizens to request access to information from governmental agencies. I requested the following from the SEC:

I hereby request the following information from the SEC on ZAGG Inc. (NASDAQ:ZAGG) under the rights afforded to me by Congress in the Freedom of Information Act:
1) All information and/or case files on any historical investigation by the SEC of ZAGG Inc. or any of its senior officers or directors (both formal and informal).
2) All information and/or case files on any currently underway investigation by the SEC of ZAGG Inc. or any of its senior officers or directors (both formal and informal).

My request was accepted and assigned to an SEC employee in the FOIA department but I did not receive any reply. When several months had passed without a reply I started sending requests for a status update. After several requests I received the following reply:

records responsive to your request were subject to several confidential treatment requests. Until our negotiations with the confidential treatment submitters is complete, we cannot review or release of any of those records. Once our negotiations are complete we will be able to make a final determination concerning the records.

This is a very interesting and important response for several reasons. First off, if the records that are being referenced were not pertaining to an investigation by the SEC then they would not be "responsive" to my request. The vast majority of FOIA requests submitted to the SEC come back simply with a "no records" reply (7,866 out of 11,562 FOIA requests received that reply from the SEC in 2011). The second reason that the response was important and interesting can be found in this law firm's report on how to handle SEC investigations:

In the report they recommend that companies that are the target of SEC investigations:

Remember to request confidential treatment under the Freedom of Information Act for documents that are produced to the SEC.

I encourage all shareholders and analysts following ZAGG to examine the information above and draw their own conclusions. In my opinion the facts are indeed pointing toward an ongoing investigation into ZAGG by the SEC. Caveat emptor!

Disclosure: I have no positions in any stocks mentioned, but may initiate a short position in ZAGG over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.