Want the plaintiffs to voluntarily dismiss their securities class action? All you have to do is get the SEC to approve your “unusual” accounting practices. According to an article in the Boston Globe, PolyMedica Inc. (Nasdaq: PLMD – a maker of diabetes test kits) has convinced the SEC to approve its use of a “1993 accounting rule to record marketing costs as an asset on its balance sheet.” This accounting treatment was the subject of the securities class actions pending against the company, which may now be dropped.
Quote of note: “PolyMedica argued it operates like an insurance company because customers sign up immediately upon viewing an ad. The company is well known for the blood-glucose test kits it sells via television ads under its Liberty brand name. The company said the SEC has decided that ‘PolyMedica should continue to capitalize its direct response advertising costs related to the acquisition of new customers, rather than expensing such costs as incurred.'”