The Securities and Exchange Commission is now engaging in a formal
investigation of Adelphia Communications Corp.'s disclosures about debt and
insider dealings, the company said Wednesday.
Previously, the SEC's inquiry had been characterized as informal -- a routine
response given recent controversy over an acknowledgement that $2.3 billion in
debt had built up in a co-borrowing relationship with a company privately owned
by Adelphia chairman John Rigas and his family.
Unbeknownst to investors, Adelphia was guaranteeing Rigas family loans used
to buy Adelphia securities.
A formal investigation means that the SEC will be making extensive document
demands from the company and interviewing, and possibly deposing, company
executives.
Adelphia has also indefinitely delayed filing its annual 10-K disclosure to
the SEC and investors, including details about the debt and asset structure of
the private Rigas family company.
Adelphia shares fell 5 percent to $7.60 apiece in early trading Wednesday,
and they are off 68 percent in the past month.
Because of the 10-K delay, NASDAQ has changed the company's ticker symbol
from 'ADLAC' to 'ADLAE.'
