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.
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.