SEC Charges Corporate Insiders for Failing to Update Beneficial Ownership Disclosure in Going Private Transactions

July 01, 2015

Earlier this year, the U.S. Securities and Exchange Commission (“SEC”) announced charges against insiders in three going private transactions. In each case, the SEC focused on the failure of the insiders, including directors, officers and significant shareholders, to update disclosure in Schedule 13D beneficial ownership reports. These enforcement actions, which were settled by paying a financial penalty, sanctioned insiders for taking “steps to advance undisclosed plans to effect going private transactions." Taken together, the enforcement actions may accelerate the timing and expand the level of disclosure required by corporate insiders when exploring a sponsor-led management buy-out or other deal to take a company private.

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