NY Sports Clubs Operator Facing Formal SEC Inquiry

(Reuters) - New York Sports clubs owner Town Sports International Holdings Inc said the U.S. Securities and Exchange Commission was formally investigating the company's deferral of certain payroll costs related to membership sales.

Shares of the company, whose other brands include Boston Sports clubs, Washington Sports clubs and Philadelphia Sports clubs, were down 11 percent at $2.50 in trading after the bell.

In a regulatory filing, Town Sports, which operated 166 fitness clubs in the United States as of June 30 and three clubs in Switzerland, said it had been under informal investigation since May last year.

The SEC was also investigating the time taken by the company for recording amortization of the deferred costs into expense and initiation fees into revenue, the New York-based operator of health clubs said.

The SEC issued the formal investigation order on September 14.

(Reporting by Mihir Dalal in Bangalore; Editing by Vinu Pilakkott)

Copyright 2009 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.