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SEC Press Release 9/10/2014
SEC Announces Fraud Charges against Biotech Company and Former Executive who failed to report Insider Stock Sales. Today, the SEC announced charges against 28 officers, directors, or major shareholders for violating federal securities laws that require them to promptly report information about their holdings and transactions in company stock.
A total of six publicly traded companies were charged for contributing to filing failures by insiders or failing to report their insiders’ filing delinquencies.
The charges were a result of an SEC enforcement initiative focusing on two types of ownership reports that give investors the opportunity to evaluate whether the holdings and transactions of company insiders could be indicative of a company’s future performance. Both types of ownership reports (Form 4 and Schedule 13D/13G) have certain timing requirements in regards to when they have to be filed.
The accused individuals are charged with repeatedly filing their insider stock sale documents late; sometimes by weeks, months, and even years.
Andrew M. Calamari, Director of the SEC’s New York Regional Office, added, “The reporting requirements in the federal securities laws are not mere suggestions, they are legal obligations that must be obeyed. Those who fail to do so run the risk of facing an SEC enforcement action.”
These reporting requirements under Section 16(a) of the Securities Exchange Act of 1934 and under Section 13(d) or (g) of the Exchange Act apply irrespective of profits or a person’s reasons for acquiring holdings or engaging in transactions. The failure to timely file a required beneficial ownership report, even if inadvertent, constitutes a violation of these rules.
The individuals that chose to settle the charges are required to pay financial penalties totaling $2.6 million.
For full access to the SEC press release, please click here.