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SEC Investigating Krispy Kreme

NEW YORK -- The Securities and Exchange Commission has opened an investigation into Krispy Kreme, the company announced Friday, according to the Associated Press.

The Winston-Salem, N.C.-based company, which sells its products through numerous retail outlets including supermarkets and convenience stores, did not specify the reasons for the investigation in a news release. But company executives in July confirmed that Krispy Kreme is the subject of an "informal, nonpublic inquiry" by the SEC on its franchise reacquisitions and its future earnings guidance.

Krispy Kreme said in a news release that the SEC notified it of the investigation on Thursday. A message left with a company spokeswoman was not immediately returned Friday.

Krispy Kreme's stock, once a Wall Street darling, has been under heavy pressure this year, since the company posted a loss for the first quarter and reported sub-par earnings in the second quarter, blaming the popularity of low-carbohydrate diets. The company has closed numerous stores and has faced shareholder lawsuits.

Krispy Kreme last month said an independent auditor refused to sign off on the firm's second-quarter financial statement until an outside law firm hired by the company's board performed additional work. Krispy Kreme did not specify the source of the concern, saying only that it regarded "a specific matter relating to an acquisition in fiscal 2004."
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