U.S. officials from the Securities and Exchange Commission (SEC) are reportedly investigating Sprint parent company SoftBank over allegations the company’s former president Nikesh Arora had conflicts of interest prior to his departure.
According to Bloomberg, allegations have surfaced that Arora, who stepped down from his position at SoftBank last week, may have had conflicts of interest or engaged in “questionable behavior” before his exit. The SEC is also investigating SoftBank’s disclosures to investors, the report said.
The investigation marks a preliminary action from the SEC, but doesn’t necessarily mean either SoftBank or Arora will be subject to enforcement action, Bloomberg said. At this stage, neither has been formally accused of wrongdoing, the report added.
The news isn’t a complete shock.
The day before Arora’s departure was announced, SoftBank released the results of an internal special committee investigation into shareholder claims against Arora. According to SoftBank, the committee, which was formed in February to undertake the inquiry, concluded “the claims concerning the conduct of Mr. Arora during his tenure at SBG are without merit.”
SoftBank did not specify the claims in its release, but an online copy of the letter sent from New York law firm Boies Schiller & Flexner to Softbank asking for the investigation accused Arora of putting his “personal interests – and those of his partners – above those of the companies that have employed him.” The letter also took Arora to task for his “poor investment performance and a series of questionable transactions,” and said Arora’s involvement with private equity firm Silver Lake Partners competed with his position at SoftBank.
Boies Schiller & Flexner has since handed the case over to New York attorney Ira Lee Sorkin due to its own conflict of interest.
As he had when the allegations were first made public earlier this year, SoftBank CEO Masayoshi Son said upon the release of the findings he had “complete trust” in Arora.
Prior to his departure, Arora was in line to succeed Son as head of SoftBank. His decision to exit, however, was made when Son revealed he plans to stay on at SoftBank for another five to ten years to oversee the company’s turnaround of trouble U.S. wireless carrier Sprint.
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