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Hudson receives second SEC notice

September 27 2010

The Hudson Highland Group (NASD: HHGP) reported it received a second "Wells Notice" from the U.S. Securities and Exchange Commission's Division of Enforcement that it may pursue "unspecified civil money penalty" against the company.

Hudson reported the second notice was received Sept. 23 and is related to the SEC's investigation into claims from the first notice.

The first Wells Notice was announced May 13, 2009, and alleged lack of disclosure of sales tax information on the company's 10-Q public filings for the second and third quarters of 2006 and the first quarter of 2007 as well as the company's 10-K annual report for 2006.

Hudson said it disagrees with the SEC's proposal to take legal action.

"The company has settled all of such tax matters with, and paid all taxes due to, the respective states," according to a filing with the SEC. "Furthermore, the company implemented a number of remedial actions and internal control enhancements in 2006 relating to sales tax matters, which have been operating effectively for over three years."

Hudson said it has also cooperated with the SEC's requests for information, and the SEC did not allege the company's financial statements were incorrect.

The Wells Notice allows the company time to respond before action is taken.

"While this issue is relatively meaningless to the company’s operations, we would consider it to be a negative headline for the stock," according to a report from Jeffrey Silber of BMO Capital Markets.

Hudson is a New York-based professional staffing firm.


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