Southpeak: Incorrect SEC filings won't happen again

Publisher Southpeak has issued a response to reports of a cease and desist order made against it following incorrect financial filings.

In a statement, the publisher admitted that it had not filed financial reports correctly with regards to a loan made by chairman Terry Philips, but claimed this was an "error" it had tried to correct prior to the US Securities and Exchange Commission's intervention.

"The SEC staff's inquiry was fully disclosed in our public filings and was based on the manner in which we recorded a loan during this quarter which was made by our chairman to help support our business but was not properly reported in our financial statements.

"During the investigation, we fully explained to the SEC staff that when we discovered the error in our statements, we acted promptly on our own accord with the support of our auditor and outside counsel to fully rectify the issue. The recommendation of the SEC staff resulting from this investigation is that cease and desist orders issue in which we agree to comply with our SEC filing obligations in the future.

"We are currently negotiating the exact provisions of the orders," it continued. "The SEC is not proposing that our company be prohibited from doing business as some are saying , but rather, as is the case with proceedings of like nature, the SEC is trying to assure our company's compliance in the future with our reporting obligations."

The publisher also refuted reports that outgoing chief financial officer Reba McDermott is taking legal proceedings against the company. McDermott's departure was "amicable" and "of her own accord."

The "allegations of discrimination and retaliation against a whistle blower and wrongful termination" in fact stem from the previous CFO, Andrea Jones, who was asked to leave last August, five months after the SEC filing error. Jones is seeking lost wages, benefits and punitive damages, a claim Southpeak disputes.

Added the publisher, "As we mature as a public company, we have taken great pains to install better internal controls and procedures to further assure our adherence with financial reporting obligations and we are seeking a replacement for our prior CFO [McDermott], who was instrumental in installing better controls and procedures, with the experience necessary to help us make sure similar incidents do not happen again."

It also emerged yesterday that Southpeak has sold the UK rights to RPG Two Worlds II back to creator TopWare Interactive, which will self-publish in January.

There had been some public disagreement between the two firms about the game's delayed release, but this new arrangement apparently stems from TopWare's desire to make additional changes to the title. SouthPeak remains the game's US and Australian publisher.