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The SEC Cracks Down on Transactions and Holdings Filing Violations

September 11, 2014

Summary: Yesterday, the SEC announced an enforcement initiative with respect to violations of laws requiring prompt reporting of transactions and holdings. In an effort to “root out” repeat late filers of Section 16(a) reports and Schedules 13D and 13G, 28 officers, directors or major shareholders were charged with violating federal securities laws requiring them to promptly report information about their holdings and transactions in company stock. Notably, six publicly traded companies were also charged for contributing to filing failures by insiders or failing to report their insiders’ filing delinquencies. A total of 33 of the 34 individuals and companies named in the SEC’s orders agreed to settle the charges and pay financial penalties totaling $2.6 million.

The SEC used quantitative analytics to identify individuals and companies with especially high rates of filing deficiencies. Andrew J. Ceresney, Director of the SEC’s Division of Enforcement stated that the actions were brought “to send a clear message about the importance of these filing provisions. . . . Officers, directors, major shareholders, and issuers should all take note: inadvertence is no defense to filing violations, and we will vigorously police these sorts of violations through streamlined actions.”

The SEC’s orders named 13 individuals who were officers or directors of public companies, five individuals who were beneficial owners of publicly traded companies, 10 investment firms in connection with beneficial ownership of publicly traded companies and six publicly traded companies.

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