The SEC is looking into how Krispy Kreme accounted for the repurchase of franchises and lowered profit forecasts last year. The departures are the first stemming from the investigations since Krispy Kreme, the second-largest U.S. doughnut chain, ousted Chief Executive Scott Livengood in January and said it will restate last year's earnings.

"I'm very pleased they're taking such serious action," said Peter James Hall, who oversees $1 billion at Sydney, Australia-based Hunter Hall Investment Management, Krispy Kreme's biggest shareholder with 5.3 million shares. "The most important thing is that the special committee reports and the company reports its financial statements. Then we move on to the next phase of the evolution of the company."

Other than announcing that six executive are departing, Krispy Kreme is saying little, at least officially, about the matter:

Five of those thrown out Tuesday resigned and one retired, the company said. It will fill the positions with existing personnel "for the time being." Krispy Kreme won't comment beyond the release, said Brooke Smith, an outside spokeswoman for the company.

Perhaps it's because there are more problems in the pantry:

The departures increase "the likelihood of significant findings from current SEC and Department of Justice investigations," JPMorgan analyst John Ivankoe wrote Tuesday. "The sudden removal of these executives points to far-reaching abuse within the former management ranks," he wrote.

The fact that Krispy Kreme won’t comment beyond the release is no surprise. What they are not telling us, for now at least, is that these six execs may soon be the subject of criminal prosecution, that they are going to have to hire their own lawyers to defend them, real good lawyers too, the kind that won't accept promises of lifetime deliveries of coffee and donuts as payment.

But there is something else they are not revealing. It has to do with the “next phase of the evolution of the company.” My sources inside Krispy Kreme say the firm has a new donut under development- the zero-carb donut (hole). And apparently the company has high hopes for it. Speaking off-the-record to several prominent Wall Street analysts, company officials have said that the ZCD, as its called inside the company, will help reverse the downward sprial of the stock price, restore the damaged reputation, and recoup market share recently lost to Dunkin Donuts.

As I understand it, the expected roll-out (pun intended) is early next year. Should the ruse be uncovered by the Food and Drug Administration, the company will restate the dietary information and put everyone associated with the project on Atkins' diets before firing them.

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