SEC May Sue Northrop on Disclosures to Shareholders

The Securities and Exchange Commission may file a civil lawsuit against Northrop Grumman Corp. for failing to give shareholders updated information about its failed merger in 1998 with Lockheed Martin Corp.

The SEC, in a Sept. 27 letter, told Los Angeles-based Northrop that it was considering recommending that “civil injunctive proceedings” be initiated, alleging that the defense contractor failed to be more forthcoming with investors about the proposed Lockheed merger.

The merger, which would have been the largest in the defense industry at the time, was abandoned after the Justice Department raised antitrust concerns.

Officials at Northrop first disclosed the SEC letter in a regulatory filing last month. Northrop also disclosed the letter Tuesday in its quarterly report.

Northrop said the charges appear similar to those in several civil lawsuits brought against it by shareholders shortly after the merger collapsed.

The shareholder suits alleged that Northrop failed to provide the latest information on the status of the antitrust investigation before it rejected the merger. The lawsuits in federal court eventually were dismissed.

“This is old news,” said Bob Bishop, a Northrop spokesman. “Seven judges have reviewed this matter and have dismissed it.”

SEC officials could not be reached for comment.

Northrop’s stock closed Tuesday at $97.28, down 12 cents, on the New York Stock Exchange.