Insiders in two separate SEC enforcement actions settled by consenting to injunctions against further violations of various provisions of the federal securities laws, including Section 16(a). In SEC v. David Aubel, the defendant and others allegedly engaged in a fraudulent scheme to manipulate the stock of a waste processing company, and sold the company’s stock into the manipulated market without reporting the sales on Form 4. The defendant, who had already pleaded guilty in a related criminal case, consented to an injunction against further violations of the antifraud provisions of the 1933 and 1934 Acts, the registration requirements of the 1933 Act, and Sections 13(d) and 16(a) of the 1934 Act.
In SEC v. Timothy Crawford, the SEC alleged that the former CEO of an oil and gas penny stock company caused the company to file fraudulent reports on Form 10-Q while he sold stock into the market without filing Forms 4. The defendant consented to an injunction against further violations of the antifraud provisions of the 1933 and 1934 Acts, the periodic reporting requirements of the 1934 Act, and Sections 13(d) and 16(a) of the 1934 Act.
These cases are consistent with the SEC’s recent practice of bringing enforcement actions under Section 16(a) only in connection with fraudulent schemes in which other, more serious, violations are alleged. The last enforcement actions based solely on Section 16(a) violations occurred as part of a “sweep” in 2014.
-Alan Dye, Section16.net February 13, 2020