Action against Defendants, a finance and technology company and its CEO, for an alleged fraudulent public offering. According to the SEC, Defendants qualified for a public offering by making false representations to the SEC, distributed shares to meet qualification criteria without collecting payment, and committed accounting fraud by recording sham revenue. A parallel criminal case is proceeding against Defendant CEO, and the SEC has previously charged both Defendants and other individuals with alleged unregistered trading.
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Blog Posts Tagged With Corporate and Other Issues
Subscribe to Corporate and Other Issues RSS FeedSEC v. Kik Interactive Inc. (S.D.N.Y. June 4, 2019, Contested)
Action against Defendant, a technology company that offers an instant messaging application, for an alleged illegal offering of digital tokens. According to the SEC, Defendant financed a new line of business by offering digital tokens to the public. The SEC claims that Defendant marketed these tokens as an investment opportunity and assured investors that they would become more valuable as demand for the tokens rose. The SEC alleges that at the time of the offering
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In re Telefônica Brasil S.A. (A.P. May 9, 2019, Settled)
Action against Respondent, a Brazilian telecommunications company, for alleged violations of the FCPA’s books and records and internal accounting controls provisions. Respondent has agreed to pay a civil penalty of $4,125,000.
SEC v. Danny R. Williams (S.D. Ind. May 9, 2019, Contested)
Action against Defendant, president of a trucking company, for alleged accounting fraud. According to the SEC, Defendant agreed to purchase trucks from third parties at inflated prices, and the third parties agreed in exchange to purchase Defendant’s used trucks at similarly inflated prices. The SEC alleges that Defendant therefore concealed losses on the sales of the used trucks, resulting in falsified financial statements. Defendant has pleaded guilty in a parallel criminal proceeding in the Southern
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In re GT Advanced Technologies, Inc. (A.P. May 3, 2019, Settled); In re Thomas Gutierrez (May 3, 2019, Settled)
Actions against Respondents, a high-tech glass company and its former CEO, for alleged fraud. According to the SEC, Respondent company owed hundreds of millions of dollars to a customer for failing to meet product specifications. The SEC alleges that Respondents misled investors about this debt and failed to report it as current, soon thereafter filing for bankruptcy. Respondents have agreed to cease-and-desist orders, and Respondent CEO has agreed to pay disgorgement of $15,510, prejudgment interest
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SEC v. Celadon Group, Inc. (S.D. Ind. Apr. 25, 2019, Settled)
Action against Defendant, a truckload freight company, for alleged accounting fraud. According to the SEC, Defendant purchased and sold used trucks at inflated prices to avoid recognizing certain charges and losses. The SEC alleges that as a result, Defendant overstated its financials in its annual report. Defendant has agreed to pay disgorgement of $7 million, which the SEC will deem satisfied by Defendant’s payment of restitution in a parallel criminal case.
SEC v. Jeffrey C. Mack and Lawrence C. Blaney (D. Minn. Apr. 3, 2019, Contested)
Action against Defendants, two former officers of a fintech company, for alleged accounting fraud. According to the SEC, Defendants falsely recorded revenue from certain contracts subject to secret side letters that gave customers an unconditional right to cancel without an obligation to make any payments. The SEC alleges that the cancellation right precluded recognition of the revenue under GAAP.
SEC v. Peter Armbruster, et al. (E.D. Wis. Apr. 3, 2019, Contested)
Action against Defendants, the former CFO and two former employees of a transportation company, for alleged accounting fraud. According to the SEC, Defendants fraudulently deferred expenses to be spread over multiple quarters, failed to write off overvalued assets, and overstated receivables to meet earnings targets and projections. Defendants have been charged in a parallel criminal case.
SEC v. Daniel Mattes (N.D. Cal. Apr. 2, 2019, Settled); In re Chad Starkey (A.P. Apr. 2, 2019, Settled)
Actions against Defendant, the founder and former CEO of a fintech company, and Respondent, the company’s former CFO, for alleged fraud and negligence. According to the SEC, Defendant overstated the company’s revenue and subsequently sold his company shares to secondary market investors, concealing his gains from the company’s board. The SEC alleges that Respondent knew or should have known of Defendant’s alleged fraud and failed to exercise reasonable care with respect to company financial statements.
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In re Mutual Coin Fund LLC and Usman Majeed (A.P. Apr. 1, 2019, Settled)
Action against Respondents, a cryptocurrency company and its principal, for an alleged unregistered public offering. According to the SEC, Respondents submitted a Form D Notice of Exempt Offering but improperly solicited investments from the general public. The SEC further alleges that in soliciting investments, Respondents misrepresented the amount of money raised and the sizes of other investors’ commitments. Respondents have agreed to pay, jointly and severally, disgorgement of $10,000.
SEC v. Timothy W. Crawford, et al. (S.D. Ohio Mar. 19, 2019, Contested)
Action against Defendants, an oil-and-gas penny stock company and its former CEO, for allegedly concealing in financial reports the loss of the company’s major revenue source. According to the SEC, after losing control over two oil-and-gas leases, Defendants made misrepresentations to investors in quarterly reports to conceal that development. The SEC also alleges that Defendants raised additional money from investors while improperly withholding information about the loss of revenue source, misreported the CEO’s stock ownership,
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SEC v. Volkswagen Aktiengesellschaft, et al. (N.D. Cal. Mar. 14, 2019, Contested)
Action against Defendants, an auto manufacturer, two of its subsidiaries, and its former CEO, for alleged fraud in connection with misstatements made about vehicle emissions. According to the SEC, Defendants knew that some of their vehicles exceeded legal emissions limits and passed emissions tests due only to a device installed on the cars. The SEC alleges that Defendants made false and misleading statements to investors and underwriters to conceal this information while issuing over $13
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In re Mobile TeleSystems PJSC (A.P. Mar. 6, 2019, Settled)
Action against Respondent, a Russian telecom company, for alleged violations of the FCPA’s anti-bribery, books and records, and internal accounting control provisions. According to the SEC, Respondent made improper payments to Uzbek government officials to gain market access and improperly recorded the payments in its books and records. Respondent has agreed to pay a civil penalty of $100 million. In parallel criminal proceedings, Respondent has entered into a deferred prosecution agreement with the Department of
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SEC. v. Mark E. Kuchenrither (A.P. Mar. 1, 2019, Settled)
Action against Respondent, a former CFO, for alleged failure to comply with the applicable standard of care in making financial projections. The SEC alleges that, to obtain a fairness opinion, Respondent revised his company’s projections based on inadequately vetted assumptions about potential acquisitions. Respondent has agreed to pay a civil penalty of $50,000.
SEC Files Motion for Order to Show Cause in Case Against Elon Musk (S.D.N.Y. Feb. 27, 2019)
The SEC sought an order to show cause why Elon Musk, the CEO of Tesla, should not be held in contempt for a violation of an October 2018 final judgment by the District Court for the Southern District of New York. The judgment required Musk to obtain pre-approval of any written communications that “contained, or reasonably could contain, information material to Tesla or its shareholders.” The SEC filed this motion after Musk tweeted about the
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SEC v. Jack D. Massimino and Robert C. Owen (C.D. Cal. Feb. 25, 2019, Settled)
Action against Defendants, two former executives of a now defunct public company that operated for-profit schools, for their roles in the company’s alleged failure to disclose material regulatory risks in public filings. According to the SEC, the company improperly inflated its long-term debt in financial submissions to the Department of Education. The SEC alleges that Defendants failed disclose in public filings that the inflation could affect the company’s access to education funds. Defendants have agreed
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In re Gladius Network LLC (A.P. Feb. 20, 2019, Settled)
Action against Respondent, a cybersecurity company, for alleged unregistered initial coin offering. According to the SEC, Respondent conducted an initial coin offering without registering or qualifying for an exemption. Respondent agreed to return funds to participating investors. The SEC did not impose a penalty due to Respondent’s self-reporting and cooperation.
SEC v. Kevin R. Kuhnash and Jason P. Jimerson (S.D. Ind. Feb. 12, 2019, Contested)
Action against Defendants, former executives of a plastics manufacturer, for alleged fraud in connection with the company’s sale to a public company. According to the SEC, the company routinely made material misrepresentations about product specifications and test data. The SEC alleges that Defendants concealed these practices while negotiating the company’s acquisition. Defendants have been charged in a parallel criminal action in the Southern District of Indiana.
In re Digital Turbine, Inc. (A.P. Jan. 29, 2019, Settled)
Action against Respondent, a technology company, for alleged failure to implement and maintain sufficient Internal Control Financial Reporting. According to the SEC, Respondent’s Forms 10-K disclosed material weaknesses related to its financial statements and reporting over a period of seven years but did not adequately address those weaknesses, which included inadequate accounting staffing and inadequate financial information technology. Respondent has agreed to pay a civil penalty of $100,000.
In re Lifeway Foods, Inc. (A.P. Jan. 29, 2019, Settled)
Action against Respondent, a dairy foods producer, for alleged failure to implement and maintain sufficient Internal Control Financial Reporting (“ICFR”). According to the SEC, Respondent’s Forms 10-K disclosed recurring material weaknesses related to its financial statements and reporting over a period of nine years but did not sufficiently address those weaknesses. The SEC also alleges that Respondent failed to perform an ICFR evaluation and assessment for two consecutive years and that Respondent had restated its
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In re CytoDyn Inc. (A.P. Jan. 29, 2019, Settled)
Action against Respondent, a biotechnology company, for alleged failure to implement and maintain sufficient Internal Control Financial Reporting. According to the SEC, Respondent’s Forms 10-K disclosed material weaknesses related to financial statements and reporting over a period of nine years, including inadequate segregation of financial duties, but provided insufficient information about the specific weaknesses. Respondent has agreed to pay a civil penalty of $35,000.
In re Grupo Simec S.A.B. DE C.V. (A.P. Jan. 29, 2019, Settled)
Action against Respondent, a manufacturer of iron and steel products, for alleged failure to implement and maintain sufficient Internal Control Financial Reporting (“ICFR”). According to the SEC, Respondent’s Forms 10-K disclosed material weaknesses related to its financial statements and reporting over a period of 10 years but did not adequately address those weaknesses, which included inadequate segregation of financial duties, inadequate transaction controls, and inadequate financial oversight. Respondent has agreed to pay a civil penalty
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In re Hertz Global Holdings, Inc., and The Hertz Corporation (A.P. Dec. 31, 2018, Settled)
Action against Respondents, a rental car company and its holding company, for alleged financial misstatements. According to the SEC, Respondents misstated pretax income, failed to disclose material facts to investors, issued earnings guidance that was inaccurate based on internal analyses, and failed to maintain adequate accounting controls. Respondents have agreed to pay a civil penalty of $16 million.
In re Polycom, Inc. (A.P. Dec. 26, 2018, Settled)
Action against Respondent, a communication product company, for alleged violations of the FCPA’s books and records and internal accounting controls provisions. According to the SEC, Respondent’s subsidiary provided discounts to distributors and resellers with the understanding that the discounts would be used to make cash payments to government officials who had influence over purchasing decisions. The SEC further alleges that Respondent failed to maintain adequate accounting controls and lacked an effective anti-corruption compliance program with
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