Daily Journal Corporation (DJCO) issued a statement on December 26 2025 rejecting claims from activist investor Buxton Helmsley USA and its CEO, Alexander Erwin Parker, that the company improperly expensed software development costs under ASC 985‑20. DJCO maintains that its accounting treatment is consistent with the standard and has been audited by external auditors.
The statement notes that DJCO has referred the matter to federal and state authorities for potential criminal prosecution and to the SEC Enforcement Division for civil charges. The company says it has taken no action to alter its financial statements and remains confident in the integrity of its reporting and governance processes. DJCO’s board emphasized its commitment to transparency and compliance, stating it will continue to address material weaknesses in internal controls through hiring, ERP implementation, and enhanced review procedures.
Buxton Helmsley has been sending letters to DJCO since July 2025, demanding board seats and a lucrative consulting contract. The activist’s shareholding is minimal—one share—yet the company views the campaign as a “shakedown attempt” and “coercive tactics.” DJCO’s referral to authorities signals that it considers the activist’s actions to be more than legitimate investor advocacy.
The company’s management highlighted that its accounting practices are in line with ASC 985‑20 and that the alleged misstatement would have required capitalizing software development costs once technological feasibility is established. DJCO’s audit committee, external auditors, and independent experts have reviewed the accounting treatment and found it appropriate for a licensing‑focused business model.
DJCO’s board reiterated that it will strengthen internal controls, including the implementation of a new ERP system, to prevent future weaknesses. The company also urged shareholders to review the full disclosure on its investor‑relations website for detailed information on the allegations and its rebuttal. The statement concludes that DJCO remains confident in its financial reporting and governance processes, and that it will continue to defend its accounting practices against what it views as unfounded claims.
The company’s response underscores its intent to protect its financial integrity and to mitigate potential reputational damage from the activist’s campaign. By involving federal, state, and SEC authorities, DJCO signals that it is prepared to pursue legal recourse if the allegations are deemed baseless, thereby reinforcing its commitment to regulatory compliance and shareholder confidence.
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