Boston Co. Probing Profit Statement for 3 Quarters

NEW YORK —  Boston Co., a financial services subsidiary of Shearson Lehman Hutton Inc., said Friday that its profits for the first nine months of 1988 may have been overstated by as much as $15 million, and three company officers have been asked to take a leave of absence pending a review.

The Boston-based firm, wholly owned by Shearson, would not give out its profits, but the parent company said it had earned $140 million in the first three quarters of the year.

Boston Co. said any required adjustments would be included in its 1988 financial statements. It said it expected the fourth quarter to be profitable even if an adjustment is made.

Boston Co., which hired economist Allen Sinai away from the parent company earlier this year, said three officers, whom it declined to identify, were asked to take a paid leave of absence pending the completion of a review.

“A preliminary analysis conducted by the company indicates that the timing of the recognition of certain revenue and expense items may have resulted in an overstatement of its earnings during each of the first three quarters of 1988,” the company said in a statement.

Early indications pointed to an overstatement of between $10 million to $15 million after taxes, it said.

Boston Co. said a special committee of outside directors was reviewing the accounting for the first three quarters, assisted by independent auditors Coopers & Lybrand.

“Any necessary regulatory agencies have been notified of our actions,” said a Boston Co. spokesman.