SEC and 12 firms agree to $63 million settlement for recordkeeping issues

Twelve companies have agreed to settle with the Securities and Exchange Commission for a total of $63.1 million to address claims that they did not appropriately register prohibited sales of securities in initial public offerings. The SEC accused these firms of violating federal securities laws by participating in the illegal sale of stock to retail investors without properly registering the transactions.

The SEC alleged that from 2014 to 2019, the companies engaged in the unregistered sale of securities in violation of the Securities Act. This practice involves selling shares in IPOs to investors, including those who are not qualified institutional buyers or accredited investors, in violation of regulations governing the securities industry. By failing to register these transactions, the companies disregarded key investor protection provisions in federal securities laws, according to the SEC.

The settlement requires the companies to collectively pay $63.1 million in disgorgement and prejudgment interest. The firms also agreed to adhere to certain undertakings as part of the settlement, including an agreement to retain an independent compliance consultant to review and recommend improvements to their policies and procedures related to initial public offerings. The SEC emphasized the importance of vigilance and compliance with securities laws to ensure the integrity of the markets and protect investors’ interests.

These settlements underscore the SEC’s commitment to enforcing regulations governing securities transactions and holding firms accountable for violations of federal securities laws. The SEC’s Division of Enforcement investigates potential violations of securities laws and takes action against individuals and entities found to have engaged in unlawful practices. By imposing financial penalties and requiring firms to implement remedial measures, the SEC aims to deter future violations and promote compliance with securities regulations.

The companies involved in these settlements have agreed to cooperate with the SEC’s ongoing investigation and take steps to prevent similar violations in the future. The SEC’s enforcement actions send a strong message to the financial industry about the repercussions of disregarding investor protection laws. The settlements demonstrate the SEC’s dedication to upholding the integrity of the securities markets and safeguarding the interests of investors.

Overall, the SEC’s enforcement actions against these twelve firms highlight the agency’s commitment to ensuring compliance with federal securities laws and holding violators accountable for their actions. By addressing allegations of improper securities sales in initial public offerings, the SEC aims to protect investors and maintain the integrity of the markets. These settlements serve as a reminder to financial firms of the importance of following regulations and fulfilling their obligations to investors.