Portuguese-based telecommunications company Portugal Telecom SGPS S.A., now known as Pharol SGPS S.A., will pay a $1.25 million penalty for its failure to properly disclose the nature and extent of credit risk involved in its investments in debt instruments issued by companies of Portuguese conglomerate Grupo Espirito Santo. An SEC investigation found that Portugal Telecom’s 2013 financial statements had multiple disclosure failures. As a result of these failures, Portugal Telecom’s investors were unable to form an overall picture of the risks arising from the company’s investment in Grupo Espirito Santo debt instruments, investments that constituted 82% of Portugal Telecom’s short-term investments. SEC
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