The purpose of this research paper is to access the SEC website to locate Litigation Releases and Press Releases. You are also required to download data from the Wharton Database to investigate the relationship between fraudulent and bad news releases about a public company and its stock prices.
This assignment is graded for content, correct use of English language and grammar. You are highly encouraged to use the writing centers offered by the University and Mihaylo College before submitting your assignment.
The answer to the questions should be organized in the following sections:
Title
Your name
Bally Fitness Litigation Release Summary
Bally Fitness Press Release Summary
Analysis of Bally's stock prices from January 1997-December 2009
Your answers must not exceed five double spaced pages including the stock price chart in 12 point font. You must be precise and to the point.
The Securities and Exchange Commission found Bally Total Fitness Holding Corporation, a nationwide commercial operator of fitness centers, fraudulently accounted for three types of revenues it received from its members. The SEC also charged the audit firm and six partners for their roles in the accounting violations. Visit the SEC website (sec.gov) and search the link to
"Litigation Releases" to locate Litigation Release 20470 issued on February 28, 2008, against Bally Total Fitness to learn more about this revenue fraud.
Required:
a. Read the release and the accompanying compliant in this matter and briefly summarize the three types of alleged revenue frauds.
b. Return to the opening page on the SEC website and search the link for " press Releases" to locate the December 17, 2009, announcement of the SEC charges against the audit firm and the six partners. Summarize the SEC charges against the audit partners.
c. Read the press release and briefly summarize the SEC description for the nature of risks associated with the Bally's audit engagement.
d. To access data from the Wharton Database and be able to interpret them, please use the following credential to access the data. Please read and comply with user's agreement. Data is for education use only. https://wrds.wharton.upenn.edu/wrdsauth/members.cgi
Download the daily stock prices for Bally Total Fitness over the period January 1997- December 2009. Relating your answers in a and c above, do you identify any stock price responses to bad news in the market about Bally Total Fitness. Please use charts in Excel to identify ups and downs in stock prices.
Please make sure to explain your findings or (lack of stock prices for the entire period).