SEC Charges 28 With Insider Reporting Failures

SEC Reporting Failures

On September 10, 2014, the Securities and Exchange Commission (the “SEC”) announced enforcement actions and penalties of more than $2.6 million against 28 individual directors, officers, and beneficial owners and 6 issuers for failure to promptly report their holdings in Section 16(a) reports and Schedule 13D and Schedule 13G filings.

The insider reporting charges include 13 officers and directors, 5 beneficial owners of public companies, and 10 investment firms.

Rule 405 & the Insider Reporting Requirements

Rule 405 of Regulation S-K requires reporting issuers to identify officers, directors and beneficial owners who failed to file Section 16 reports on time during the previous year. The SEC actions demonstrates that it will seek fines against issuers as well as officers, directors and beneficial owners for not complying with Rule 405.

The SEC actions were based on the reporting requirements of Section 16(a) and Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended (Exchange Act)

Section 16(a) of the Exchange Act & Insider Reporting

Section 16(a) requires executive officers, directors, and certain beneficial owners of more than 10% of a public company’s stock to report certain transactions on Form 4. Transactions that must be reported are purchases and sales of securities, exercises and conversions of derivative securities, and grants or awards of securities by a company under an equity compensation plan. Changes in beneficial ownership must be reported within two business days following the date of the transaction.

Sections 3(d) and 13(g) of the Exchange Act & Insider Reporting

Sections 13(d) and 13(g) require any person or group who directly or indirectly acquires or has beneficial ownership of more than 5% of any issuer’s outstanding equity securities to report such beneficial ownership on Schedules 13D 13G.  Depending on the particular facts, a short-form Schedule 13G rather than the long-form Schedule 13D may be used.

The SEC actions should remind issuers, officers, directors, and beneficial owners that filings of Section 16(a) reports and Schedules 13D and 13G are are important requirements that should not be overlooked.  Failure to file in a timely manner could result in SEC enforcement action and penalties.

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   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 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.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
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