The Securities and Exchange Commission (SEC) announced that it filed a complaint charging a publicly held corporation as well as its Chairman and CEO with issuing numerous press releases containing false and misleading information about the company’s business and its future prospects.
The complaint alleges that the company issued over two dozen misleading press releases over a two year period that advertised their current and ongoing business success when, in fact, it had no revenue or earnings. The allegations claim that some of the press releases contained materially false information or omitted to disclose material information.
The Commission complaint alleges that the defendants violated Rule 10b-5 of the Securities Exchange Act of 1934. The Commission is seeking permanent injunctions against the corporation as well as its Chairman/CEO. In addition, the Commission is seeking disgorgement and civil penalties.
In brief, Rule 10b-5 states that it is illegal to use any fraudulent scheme in connection with the purchase or sale of any security. A publicly held corporation may not make any untrue statement of a material fact. In addition, a publicly held corporation may not omit to state a material fact necessary in order to make the statements made not misleading.
Failure of a corporation, as exercised by its executives and officers, to adhere to the strict guidelines of the Securities and Exchange Act of 1934 may result in severe penalties. Under U.S. law, persons violating insider trading or tipping rules may be required to pay over to the Company the profit made or the loss avoided by trading, pay the loss suffered by the persons who purchased securities from or sold securities to the insider tippee, pay civil penalties up to three times the profit made or loss avoided, pay a criminal penalty of up to $1 million and serve a jail term of up to 10 years. The Company and/or the supervisors of the person violating the rules may also be required to pay major civil or criminal penalties and could under certain circumstances be subject to private lawsuits by contemporaneous traders for damages suffered as a result of illegal insider trading or tipping by persons under the Company’s control.
If you part of an investigation by the SEC or are a victim of a violation of Securities and Exchange Act Regulations, you need the help of a competent attorney as soon as possible. DO NOT WAIT! The government is conducting an investigation using all of the resources at their disposal. You need to be sure your rights are also protected and secure your place in the recovery. Please contact The Trial Lab at (562) 452-9522 or email one of our attorneys at TGH@TheTrialLab.com.