SEC Enforcement Reminds Filers that Beneficial Ownership Reporting Obligations Are Not Optional

SEC Enforcement Reminds Filers that Beneficial Ownership Reporting Obligations Are Not Optional

Blog Keeping Current: Disclosure and Governance Developments

“Several years ago, we undertook a similar initiative to root out repeated late filers,” said Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement. “Today’s enforcement action should serve to remind SEC filers that reporting obligations under the securities laws are not optional, and there are consequences for failing to file required forms in a timely manner.”

On September 27, 2023, the Securities and Exchange Commission’s Division of Enforcement announced settled charges against five publicly-traded companies and six individuals for failures to timely report information about the individuals’ holdings and related transactions in the companies’ securities. The settled proceedings, each of which was entered into without admitting or denying the SEC’s findings, resulted in civil penalties ranging from $66,000 to $200,000, as well as cease and desist orders, and are summarized below. These actions build on the SEC staff’s continued focus on enforcing ownership reporting requirements, including the wide-ranging enforcement sweep against 34 companies and individuals in 2014.

The most recent actions involved failures by officers, directors and major shareholders to timely report holdings and transactions on Forms 3, 4 and 5 pursuant to Section 16 of the Securities Exchange Act of 1934, as amended, as well as Schedule 13D and 13G pursuant to Section 13 of the Exchange Act.  The reporting delinquencies resulted in filings being delayed for weeks, months or years beyond the prescribed due dates. The investigations that led to the charges also highlight the staff’s continued use of data analytics to uncover noncompliance with the securities laws.

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