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Systemax Under SEC Scrutiny

6/28/2011 01:49:00 PM Eastern

Port Washington, N.Y. - The
Securities and Exchange Commission (SEC) has launched a formal investigation of
Systemax in the wake of last spring's dismissal of retail chief Gilbert
Fiorentino.

According to a filing with the
agency, the SEC notified Systemax on June 21 that it will scrutinize
improprieties in the company's Miami operations that led to Fiorentino's resignation
in May and his surrender of about $11 million in assets including cash and
common stock.

Fiorentino ran the IT manufacturer's
CompUSA, CircuitCity.com and TigerDirect retail businesses.

The wrongdoing had been brought to
the company's attention by an anonymous whistleblower, which led to an internal
investigation by the board of directors through an independent audit committee.

Systemax never specified
Fiorentino's offenses, but said they occurred over a number of years and were
limited to his Miami operations. The
Miami Herald
 quoted one former vendor, Prolynkz owner Sean Pate,
who said the division was run under a "pay for play" model in which
manufacturers paid for greater product exposure in stores and websites. The
newspaper also cited two former employees who described a corporate culture of
"fear and intimidation" that led to a federal suit alleging violations of the
Fair Labor Standards Act. The suit was settled out of court.

The company has also been sued by
Dell for trademark infringement and by Florida's attorney general for failing
to pay advertised rebates.

Systemax said it intends to
cooperate fully with the SEC investigation.

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