Blog Posts Tagged With Corporate and Other Issues

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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.

SEC Order
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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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In re Centrais Elétricas Brasileiras S.A. (A.P. Dec. 26, 2018, Settled)

Action against Respondent, a partially state-owned Brazilian energy company, for alleged violations of the FCPA’s books and records and internal accounting controls provisions.  According to the SEC, officers of Respondent’s subsidiary engaged in a scheme to rig construction bids, inflate contract prices, and pay bribes to government officials.  The SEC further alleges that Respondent’s accounting controls were inadequate.  Respondent has agreed to pay a civil penalty of $2.5 million.

SEC Order

SEC Administrative Summary
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In re Nutriband, Inc., et al. (A.P. Dec. 26, 2018, Settled)

Action against Respondents, a nutritional patch manufacturer and two of its directors, for alleged filing of misleading statements.  According to the SEC, Respondents misrepresented the FDA’s jurisdiction over the company’s products and failed to disclose that the products required FDA approval.  Respondent directors have agreed to pay civil penalties of $25,000 each.

SEC Order
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In re ADT Inc. (A.P. Dec. 26, 2018, Settled)

Action against Respondent, a home security firm, for failure to comply with disclosure requirements with respect to non-GAAP financial measures.  According to the SEC, Respondent used non-GAAP metrics in its financial statements and failed to give equal or greater prominence to comparable GAAP metrics.  Respondent has agreed to pay a civil penalty of $100,000.

SEC Order
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In re Paul A. Margis (A.P. Dec. 18, 2018, Settled)

Action against Respondent, a former senior executive of an electronics company, for alleged books and records and internal accounting control violations.  According to the SEC, Respondent falsely recorded payments to several consultants, including a government official, and misled an auditor about the company’s internal accounting controls and books and records.  Respondent has agreed to pay a civil penalty of $75,000.

SEC Order 

SEC Press Release

Related Action
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In re Takeshi “Tyrone” Uonaga (A.P. Dec. 18, 2018, Settled)

Action against Respondent, a former senior executive of an electronics company, for alleged books and records and internal accounting control violations.  According to the SEC, Respondent backdated a contract, which caused the company to improperly recognize revenue, and misled an auditor about financial statements, internal accounting controls, and books and records.  Respondent has agreed to pay a civil penalty of $50,000.

SEC Order 

SEC Press Release 

Related Action
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In re Santander Consumer USA Holdings Inc. (A.P. Dec. 17, 2018, Settled)

Action against Respondent, an automotive financing company, for alleged books and records and internal accounting controls violations.  According to the SEC, Respondent failed to properly calculate and report certain measures in accordance with GAAP.  Respondent has agreed to pay a civil penalty of $1.5 million.

SEC Order 

SEC Administrative Summary
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In re Lotus Bio-Technology Development Corporation (A.P. Dec. 11, 2018, Settled)

Action against Respondent, a biotechnology development company, for alleged violation of interim financial review requirements of Regulation S-X.  According to the SEC, Respondent filed a Form 10-Q with financial statements that had not been reviewed by an independent public accounting firm.  Respondent has agreed to a cease-and-desist order.  The SEC did not impose a civil penalty based on Respondent’s demonstrated inability to pay.  SEC Order
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In re The Hain Celestial Group, Inc. (A.P. Dec. 11, 2018, Settled)

Action against Respondent, an organic food and personal care product company, for alleged books and records and accounting controls violations.  According to the SEC, Respondent insufficiently documented sales incentives offered to distributors and failed to implement adequate policies and procedures related to documentation.  Respondent agreed to a cease-and-desist order.  The SEC did not impose a civil penalty due to Respondent’s self-reporting, remediation efforts, and cooperation.

SEC Order 

SEC Press Release
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In re Auscrete Corporation (A.P. Dec. 11, 2018, Settled)

Action against Respondent, a construction product manufacturer, for alleged violation of interim financial statement review requirements of Regulation S-X.  According to the SEC, Respondent filed three Forms 10-Q that included financial statements that had not been reviewed by an independent public accounting firm.  Respondent has agreed to a cease-and-desist order.  The SEC did not impose a civil penalty based on Respondent’s demonstrated inability to pay.

SEC Order
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In re Frontier Oilfield Services, Inc. (A.P. Dec. 11, 2018, Settled)

Action against Respondent, an oilfield fluid disposal corporation, for alleged violation of interim financial review requirements of Regulation S-X.  According to the SEC, Respondent filed a Form 10-Q with financial statements that had not been reviewed by an independent public accounting firm.  Respondent has agreed to pay a civil penalty of $25,000.

SEC Order
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In re Eastgate Biotech Corporation (A.P. Dec. 11, 2018, Settled)

Action against Respondent, a pharmaceutical company, for alleged violation of interim financial review requirements of Regulation S-X.  According to the SEC, Respondent filed three Forms 10-Q that included financial statements that had not been reviewed by an independent public accounting firm.  Respondent has agreed to a cease-and-desist order.  The SEC did not impose a civil penalty based on Respondent’s demonstrated inability to pay.

SEC Order
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In re Agria Corporation (A.P. Dec. 10, 2018, Settled)

Action against Respondent, an agricultural company, for alleged fraudulent accounting related to a 2010 divestiture.  According to the SEC, Respondent materially overstated the value of consideration received from the divestiture, thereby underreporting the loss it incurred on the transaction.  Respondent has agreed to pay a civil penalty of $3 million.

SEC Order 

SEC Press Release
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In re Lai Guanglin (Alan) (A.P. Dec. 10, 2018, Settled)

Action against Respondent, an executive chairman of an agricultural company, for alleged scheme to manipulate the market price of the company’s American Depositary Shares (“ADSs”).  According to the SEC, Respondent used brokerage accounts to engage in trading to inflate the company’s ADS price and made materially misleading statements about the company’s compliance with a New York Stock Exchange listing standard.  Respondent has agreed to a five-year officer-and-director bar and to pay a civil penalty of
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In re Vantage Drilling International (A.P. Nov. 19, 2018, Settled)

Action against Respondent, a drilling company, for alleged violations of the FCPA’s internal accounting control provisions by its predecessor, Vantage Drilling Company (“VDC”). The SEC alleges that VDC failed to implement an adequate system of internal controls and, as a result, made payments to a former outside director that the former director may have used to bribe foreign officials. Defendant has agreed to pay disgorgement of $5 million.

SEC Order

SEC Administrative Summary
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In re Paragon Coin, Inc. (A.P. Nov. 16, 2018, Settled)

Action against Respondent, a company established to implement blockchain technology in the cannabis industry, for an alleged unregistered offering. According to the SEC, Defendant publicly offered and sold digital tokens to raise capital without registering the offering or attempting to qualify for an exemption to the registration requirements.  Defendant has agreed to pay a civil penalty of $250,000.

SEC Press Release

SEC Order
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In re CarrierEQ, Inc., d/b/a Airfox (A.P. Nov. 16, 2018, Settled)

Action against Respondent, a mobile technology business, for an alleged unregistered offering.  According to the SEC, Defendant publicly offered and sold digital tokens to raise capital without registering the offering or attempting to qualify for an exemption to the registration requirements.  Defendant agreed to pay a civil penalty of $250,000.

SEC Press Release

SEC Order
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In re Pyxus International, Inc. (formerly known as “Alliance One International, Inc.”) (A.P. Nov. 9, 2018, Settled)

Action against Respondent, a tobacco company, for alleged financial misstatements. According to the SEC, Respondent’s subsidiary, Alliance One Tobacco (Kenya) Ltd., maintained inadequate accounting controls that resulted in overstatements of inventory, accounts receivable, and retained earnings.  Respondent agreed to cease and desist from violations of the Securities and Exchange Act of 1934.  The SEC noted Respondent’s prompt remedial actions and cooperation in its order.

SEC Order

SEC Administrative Summary
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In re Walgreens Boots Alliance, Inc., et al. (A.P. Sept. 28, 2018, Settled)

Action against Respondents, a corporation, its former CEO and Director, and its former CFO, for alleged failure to disclose an increased risk that Respondent company may not meet a financial projection.  Respondent company has agreed to pay a civil penalty of $34.5 million.  Respondents former CEO and former CFO have each agreed to pay a civil penalty of $160,000.

SEC Order 

SEC Press Release
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In re Stryker Corporation (A.P. Sept. 28, 2018, Settled)

Action against Respondent, a medical technology corporation, for alleged violations of the FCPA’s books and records and internal accounting controls provisions.  According to the SEC, Respondent was unable to detect improper transactions and potential improper payments for sales in China, India, and Kuwait due to inadequate internal accounting controls, and Respondent’s Indian subsidiary maintained incomplete and inaccurate books and records.  Respondent has agreed to pay a civil penalty of $7.8 million.

SEC Order 

SEC Press
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SEC v. Nutra Pharma Corp., et al. (E.D.N.Y. Sept. 28, 2018, Contested)

Action against Defendants, a microcap issuer, its CEO, and one of its consultants, for alleged material misstatements, sales of unregistered securities, manipulative trading, and failure to submit required filings.  According to the SEC, Defendant issuer and Defendant CEO published several press releases falsely implying that Defendant issuer was selling its product internationally and expanding and improving its facilities.  The SEC further alleges that Defendant CEO’s manipulative trading created the illusion of active trading and inflated
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In re Mota Group, Inc. and Mota “Michael” Faro (A.P. Sept. 28, 2018, Settled)

Action against Respondents, a drone company and its founder, for the alleged filing of inaccurate financial statements in connection with Respondent company’s planned IPO.  The SEC alleges that information given by Respondents to an auditing firm about a distribution agreement was inaccurate, which caused the recognition of excessive revenue.  Respondent company has agreed to withdraw and certify the withdrawal the registration statement at issue.  Respondent founder has agreed to pay a civil penalty of $10,000.
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SEC v. Salix Pharmaceutical, Ltd. (S.D.N.Y. Sept. 27, 2018, Settled); SEC v. Adam C. Derbyshire (S.D.N.Y. Sept. 27, 2018, Settled)

Actions against Defendants, a pharmaceutical company and its former CFO, for alleged material misstatements and omissions to investors and analysis.  According to the SEC, Defendants provided misleading information on inventory levels of Defendant company’s drugs and failed to disclose the effect of the excess supply on future earnings.  Defendant CFO has agreed to pay $558,534 in disgorgement and prejudgment interest and a civil penalty of $494,836.  Defendant company has agreed to be enjoined from future
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