Capital Markets Bulletin: The SEC Announces Settlements with Public Companies and Certain Insiders for Violating Laws Requiring Beneficial Ownership and Transaction Reports

September 16, 2014

On September 10, 2014, the U.S. Securities and Exchange Commission (the “SEC”) announced settlements with six publicly-traded companies, twelve individuals who were officers and directors of public companies, five individuals who were beneficial owners of publicly-traded companies, and ten investment advisory firms in connection with their failure to make timely filings as required by the beneficial ownership reporting requirements of Section 13(d) and Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).1

Penalties for the violations ranged from $75,000 to $150,000 for the public companies and $25,000 to $100,000 for the individuals.2 The SEC also stated that its Division of Enforcement will litigate before an administrative law judge separate charges against a vice president of a publicly-traded company who allegedly failed to report his sales of more than 165,000 shares of his company’s stock with a market value of more than $1 million.

The SEC issued a separate press release announcing that it reached a combined $550,000 settlement with Advanced Cell Technology (“ACT”) and its former Chief Executive Officer, who allegedly defrauded investors by not reporting his sales of ACT stock for over two years.

If you have any questions regarding the information discussed above, please contact your Capital Markets Group attorney at Seward & Kissel LLP.


1 Section 13(d) of the Exchange Act and the rules promulgated thereunder require a person or entity (or group of persons and/or entities acting together) that directly or indirectly acquires beneficial ownership of more than 5% of any voting class of equity security registered under Section 12 of the Exchange Act to publicly file a statement with the SEC on Schedule 13D or Schedule 13G to disclose certain information relating to its beneficial ownership. Section 16 of the Exchange Act and the rules promulgated thereunder require a person who is a director, officer, or beneficial owner of more than 10% of any class of a domestic issuer’s (i.e., not a “foreign private issuer” as defined in the Exchange Act) equity securities to report its ownership and transactions in such equity securities on Forms 3 and 4; and subjects such reporting person to disgorgement of short-swing profits realized by such person from any (i) purchase and sale, or (ii) sale and purchase, of such equity securities within a period of less than six months.

2 Penalties for the investment advisory firms ranged from $60,000 to $120,000.