(Article from Registered Funds Regulatory Update, October 2024)
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On September 25, 2024, the SEC announced the settlement of charges against 23 entities and individuals for failing to timely file and/or amend Schedules 13D and 13G and Forms 3, 4 and 5, with penalties amounting to more than $3.8 million in total. These charges represented a continuation of the SEC’s September 2023 enforcement sweep with respect to Section 13 and 16 filings.
In this recent round of enforcement actions, the respondents fell into three categories: (i) 13 firms (in their capacity as an investor); (ii) 10 individuals; and (iii) two public companies. The two public companies were charged with contributing to filing failures of certain directors and officers and failing to report delinquencies pursuant to Item 405 of Regulation S-K, which has been a focus of SEC enforcement in recent years. Without admitting or denying the findings, all of the entities and individuals agreed to cease and desist from committing and causing future violations and pay civil monetary penalties ranging from $10,000 to $750,000. The one firm that agreed to pay a penalty of $750,000 was alleged to have failed to timely file 35 Forms 13F in addition to several late Forms 4.
While many of the respondents were charged with numerous late filings, notably some of the respondents in this sweep were charged with having made just a few late filings; for example, one respondent was charged with filing a single Schedule 13D approximately six weeks late. This recent enforcement sweep is another reminder that the SEC is prioritizing the enforcement of beneficial ownership disclosures, particularly with respect to the new filing deadlines for Schedule 13D, which became effective in February 2024, and Schedule 13G, which became effective as of September 30, 2024 (including new quarterly Schedule 13G amendments for material changes since a person’s last Schedule 13G filing).
Litigation Rel. No. 2024-148 SEC Levies More Than $3.8 Million in Penalties in Sweep of Late Beneficial Ownership and Insider Transaction Reports, (Sept. 25, 2024), available at: https://www.sec.gov/newsroom/press-releases/2024-148.