SEC Charges Empire Stock Transfer l Securities Lawyer 101 Blog
On April 8, 2014, the Securities and Exchange Commission announced enforcement actions against two leaders at a Las Vegas-based transfer agent firm who were responsible for disclosure failures in registration forms filed with the SEC. Empire Stock Transfer Inc. and the two individuals agreed to settle the SEC’s charges. Publicly traded companies typically use transfer agents to keep track of individuals and entities that own their stocks and bonds. Transfer agents generally act as an intermediary for the company, issue and cancel certificates upon changes in ownership, and handle certificates that are lost, destroyed, or stolen. Transfer agents must file registration forms with the SEC and include information about the individuals who control or finance the firm. The forms must be amended whenever any information becomes inaccurate or incomplete.
An SEC examination and subsequent investigation found that the sole owner of Empire Stock, according to its registration forms – Patrick Mokros – failed to disclose that he relied on another individual to finance the purchase of the firm. Also not disclosed in Empire Stock’s forms is the fact that Mokros allowed his financier to play a significant role in the firm’s operations and receive a substantial portion of the profits.
The SEC also found that Empire Stock’s registration forms failed to disclose the role of another leader at the firm – Matthew Blevins – who was hired in January 2007 to run the day-to-day operations of Empire Stock and oversee the firm’s finances. Empire Stock didn’t update its registration forms to disclose the additional control person until last month as the SEC’s investigation was winding down.
“Transfer agents ensure the orderly transfer of securities, and it’s critical for such gatekeepers to accurately disclose who is financing and controlling their operations,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office. “Empire’s filings told a different story than what was actually happening behind the scenes.”
The SEC’s order instituting settled administrative proceedings finds that Empire Stock, Mokros, and Blevins committed or caused violations of Sections 17(a)(3) and 17A(c)(2) of the Securities Exchange Act of 1934, and Rules 17Ac2-1(a) and (c). Empire Stock and Mokros agreed to pay a $50,000 penalty and Blevins agreed to pay a $25,000 penalty to settle the SEC’s charges. Without admitting or denying the SEC’s findings, Empire Stock, Mokros and Blevins agreed to a censure and must cease and desist from committing or causing further violations. Empire Stock must retain an independent compliance consultant.
For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit www.securitieslawyer101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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