2023-05-25 16:44:08 ET
Houlihan Lokey ( NYSE: HLI ) plans to pay $15M civil penalty to settle a Securities and Exchange Commmission probe into the firm's use of messaging platforms and whether it violated recordkeeping rules, it said Thursday.
The SEC had conducted a broad investigation into the financial industry's use of messaging for business purposes using unauthorized platforms such as WhatsApp and texting on personal devices. In September, 16 Wall Street firms had agreed to pay a total of $1.1B to settle their parts of the SEC probe. Included in that settlement were Citigroup ( C ), Goldman Sachs ( GS ), Morgan Stanley ( MS ), and Bank of America ( BAC ).
Because of that penalty, Houlihan Lokey ( HLI ) determined that it should recognize a $15M accrual in other (income)/expense, net, for its Q4 of fiscal year ended March 31, 2023, relating to the anticipated settlement.
The effect of the accrual reduces Q4 net income to $60M compared with the $75M reported on May 9 and FY2023 net income to $254M from the $269M it had reported. Q4 EPS was reduce to $0.88 from $1.10 and FY2023 EPS to $3.75 from $3.98. Revenue and adjusted EPS for those periods remain unchanged from the amount reported.
See why SA analyst Welbeck Ash Research calls Houlihan Lokey ( HLI ) a growth story with likely no upside.
JPMorgan Chase ( JPM ) agreed in December 2021 to pay $200M to settle probes on employee communications.
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Houlihan Lokey expects to pay $15M to settle SEC messaging probe