SEC Charges Seven Public Companies in Whistleblower Protection Sweep

SEC Charges Seven Public Companies with Violations of Whistleblower Protection Rule

The Securities and Exchange Commission today announced settled charges against seven public companies for using employment, separation, and other agreements that violated rules prohibiting actions to impede whistleblowers from reporting potential misconduct to the SEC. To settle the SEC’s charges, the companies agreed to pay more than $3 million combined in civil penalties.

–Acadia Healthcare Company, Inc., agreed to pay a $1,386,000 civil penalty;

–a.k.a. Brands Holding Corp. agreed to pay a $399,750 civil penalty;

–AppFolio, Inc., agreed to pay a $692,250 civil penalty;

–IDEX Corporation agreed to pay a $75,000 civil penalty;

–LSB Industries agreed to pay a $156,000 civil penalty;

–Smart for Life, Inc. agreed to pay a $19,500 civil penalty; and

–TransUnion agreed to pay a $312,000 civil penalty.

SEC Charges Esmark Inc. and Chairman James Bouchard with Announcing False Tender Offer to Purchase U.S. Steel Corp.

The Securities and Exchange Commission today announced settled charges against Esmark Inc. and its founder, chairman, and former CEO, James P. Bouchard, for publicly announcing a tender offer to purchase U.S. Steel Corporation for $35 per share even though Esmark lacked the financial means to consummate the offer.

According to the SEC’s order, on Aug. 14, 2023, at Bouchard’s direction and approval, Esmark announced an offer for all issued and outstanding shares of U.S. Steel for $35 per share, which would have required $7.8 billion in cash to complete. The following day, Bouchard appeared on a cable news program and said that Esmark had $10 billion available in cash committed to the deal and would not put up any of Esmark’s assets as collateral. The order finds that these statements were false because Esmark did not have the $7.8 billion in cash required to complete the purchase of U.S. Steel, and, therefore, Esmark and Bouchard did not have a reasonable belief that they would have the means to purchase the securities needed to complete the announced tender offer for U.S. Steel.

Mark Cuban Puts Name Up for Top Job in Harris Administration

Mark Cuban has put his name forward to head the U.S. Securities and Exchange Commission in a Kamala Harris administration.

When asked by CNBC’s Andrew Ross Sorkin if he had any insight into potential Harris Cabinet appointments, the billionaire entrepreneur replied: “I told her team, look, put my name in for the SEC. It needs to change.”

Cuban has been a fierce critic of the SEC since being cleared of insider trading in 2013 and calling the federal regulatory body a “joke.” Last week, he criticized SEC chair Gary Gensler over the agency’s crackdown on the crypto sector.

Kamala Harris’ Donors Privately Want FTC’s Lina Khan, SEC’s Gary Gensler Removed

Major Democratic donors on Wall Street are increasingly pushing Kamala Harris’ team to replace top regulators Lina Khan and Gary Gensler if the vice president wins in November.

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Meanwhile, Gensler, whose term as head of the Securities and Exchange Commission is up in 2026, is disliked privately by both Democratic and Republican donors, some of the people said. Gensler has pushed for tougher regulations, but donors have particularly bristled at what they perceive as him talking down to Wall Street, the people said.

Convicted Fraudster Cops to Second Cell Tower Investment Scam

A man who was sentenced to five years in prison in 2015 after pleading guilty to a $14.2 million cellular tower investment scheme has admitted to doing it again.

Miguel Merced-Torres pleaded guilty on Thursday to one count of wire fraud in the US District Court for the District of Puerto Rico for running a scheme nearly identical to the one that led to his earlier conviction. He was still on supervised release when federal authorities were tipped off about the latest fraud, according to filings in the earlier case.

Customer Contact Data Company Hit with COVID-Related Securities Suit

In my recent round-up of the top trends in the world of directors’ and officers’ insurance and liability, I noted that, even though we are now well into the fifth year since the initial outbreak of COVID-19 in the U.S., COVID-related securities suits continue to be filed. In the latest example of this kind of lawsuit, last week a plaintiff investor filed a securities class action lawsuit against customer contact data firm ZoomInfo Technologies, alleging that after COVID-related demand inflated the company’s results during the pandemic, the company allegedly strained to conceal subsequent declining demand from investors. A copy of the September 4, 2024, complaint can be found here.