Imnet shares plummet on news of SEC inquiry

Imnet shares plummet on news of SEC inquiry

The stock of information systems developer Imnet Systems plunged 34% late last month after the Atlanta company announced that the release of its year-end financial statements would be delayed because its auditor needed additional time to complete the company's audit.

Imnet executives said its auditor, KPMG Peat Marwick, might need the extra time to respond to a confidential informal inquiry made by the Securities and Exchange Commission, which has received anonymous letters regarding the company's financial statements. Imnet shares fell $13.63 to close at $26.88 on Sept. 30, the day the news was announced.

Imnet chairman and CEO Kenneth Rardin stressed that the auditors have not proposed any adjustments to Imnet's financial statements, nor have the auditors had any disagreements with the company over the statements. Rardin said that his company had reviewed the allegations in the letters and determined them to be without merit, and that the company's previously announced financial statements are accurate.

Imnet declined to comment on the nature of the allegations in the letters sent to the SEC. There has been some concern among industry analysts, however, over the size of the company's backlog, which grew to $51 million at the end of the fourth quarter, up 111% compared with $24.2 million at the end of 1996 (PNN 9/97).