D, F, G, 3, 4, 5: Firms Charged for Failing to Make Section 13 and 16 Filings

By: Pablo J. Man, C. Todd Gibson, and Lisa N. Ju

On 25 September 2024, the SEC announced settled charges against 23 entities and individuals for failing to make timely filings about their holdings and transactions on Schedules 13D and 13G and on Forms 3, 4 and 5, pursuant to Sections 13 and 16 of the 1934 Act, respectively. The individuals charged were officers, directors and/or beneficial owners of publicly traded companies that failed to make “insider” filings. Two firms were charged for contributing to their officers’ and directors’ failures to file insider reports and for failing to comply with their own disclosure obligations to report such delinquencies. The penalties ranged from US$10,000 to US$750,000, and in the aggregate exceeded US$3.8 million.

All firms paid financial penalties and unlike the SEC’s enforcement against firms last week for their failure to file Forms 13Fs and 13H, there was no indication that any of the firms in this settlement self-reported their violations. In addition, although not included in last week’s actions, one of the firms separately settled for failing to timely file Forms 13F. The SEC indicated that its staff used data analytics to identify the charged entities and individuals as filing required reports late.

Schedules 13D and 13G are designed to provide information about the holdings of investors who beneficially own more than five percent of any registered voting class of certain equity securities (including registered closed-end funds). Meanwhile, Forms 3, 4, and 5 are designed to provide information about public company stock transactions by corporate officers, directors, or certain investors who beneficially own more than 10 percent of the stock.

The filing requirements here are not limited to asset managers or US entities and apply to investors, domestic or foreign. These enforcement actions serve as a reminder for firms to review their Section 13 obligations, and to take note of upcoming changes to Schedule 13G deadlines, and the new requirement to file after any material changes.