DGSE Companies, Inc. Announces Final Resolution of SEC Investigation
Dallas – May 28, 2014 - DGSE Companies, Inc. (NYSE MKT: DGSE) (“DGSE” or the “Company”), a leading wholesaler and retailer of jewelry, diamonds, fine watches, and precious metal bullion and rare coin products, today announced that it had reached a settlement with the United States Securities and Exchange Commission (“SEC”), without admitting or denying allegations of any wrongdoing, which concludes the SEC’s investigation of accounting issues at DGSE from 2009 to 2011. This settlement concerns the accounting systems, policies, procedures, and controls DGSE had in place over inventory valuation and related disclosures DGSE filed with the SEC under its previous management. The SEC investigation, which DGSE first disclosed in June of 2012, focused on accounting irregularities that were uncovered after the departure of prior management, and which DGSE subsequently self-reported to the SEC.
Under the terms of the settlement, the Company consented to the entry of a judgment requiring it to implement corporate governance reforms, which are substantially similar to those it already agreed to in settling its 2013 derivative lawsuit. DGSE also agreed to the appointment of an independent consultant to review the Company’s accounting controls. No civil penalties were to be imposed on DGSE as part of the SEC settlement.
Concurrent with its announcement of the DGSE settlement, the SEC announced a settlement with DGSE’s former Chief Financial Officer, I. John Benson. According to a press release issued by the SEC on May 27, 2014, Benson agreed to a settlement in which he will pay a $75,000 penalty, be permanently barred from serving as an officer or director of a public company, and be suspended from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.
According to the same SEC press release, Benson is charged with violating the antifraud, reporting, recordkeeping, lying-to-accountants and internal controls provisions of the federal securities laws. DGSE is charged with reporting, recordkeeping, and internal controls failures. DGSE and Benson each consented to injunctions against future violations of these provisions, and DGSE has already taken or agreed to take remedial steps to correct its deficiencies.
Dusty Clem, Chairman and Chief Executive Officer, stated, “We’re pleased that no financial penalties are expected to be imposed on DGSE as part of this settlement, and are happy to be closing the chapter on these legacy matters that relate to DGSE’s previous management team. With this behind us, we can more effectively focus on the future of the Company.”
About DGSE Companies
DGSE Companies, Inc. wholesales and retails jewelry, diamonds, fine watches, and precious metal bullion and rare coin products through its Bullion Express, Charleston Gold & Diamond Exchange, and Dallas Gold & Silver Exchange operations. DGSE also owns Fairchild International, Inc., one of the largest vintage watch wholesalers in the country. In addition to its retail facilities in Illinois, South Carolina, and Texas, the Company operates internet websites which can be accessed at www.bullionexpress.com, www.dgse.com, and www.cgdeinc.com. Real-time price quotations and real-time order execution in precious metals are provided on another DGSE website at www.USBullionExchange.com. Wholesale customers can access the full vintage watch inventory through the restricted site at www.FairchildWatches.com. The Company is headquartered in Dallas, Texas and its common stock trades on the NYSE MKT exchange under the symbol "DGSE."
This press release includes statements which may constitute "forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
DGSE Companies, Inc. Hayden IR
Dusty Clem, Chairman, President and CEO Brett Maas, Managing Partner