Yahoo Finance SEC charges eight insiders over 'going private' transactions
By Jonathan Stempel
NEW YORK, March 13 (Reuters) - Eight corporate officers, directors and major shareholders were charged by the U.S. Securities and Exchange Commission on Friday with waiting too long to tell the investing public of material changes relating to their plans to take three companies private.
The defendants, who did not admit or deny wrongdoing, will pay $258,750 of civil fines for allegedly concealing steps to effect "going private" transactions, such as forming shareholder groups, obtaining necessary waivers, and determining how transactions should be conducted.
While the penalties are not large and the three companies are not household names, the cases reflect SEC Chair Mary Jo White's "broken windows" approach to enforcing securities laws, which assumes the pursuit of relatively small cases will deter others from bigger violations.
"Investors are entitled to current and accurate information about the plans of large shareholders and company insiders," Andrew Ceresney, head of the SEC enforcement division, said in a statement. "Stale, generic disclosures that simply reserve the right to engage in certain corporate transactions do not suffice."
Federal law requires "beneficial owners" who own more than 5 percent of a company's stock to promptly disclose material changes, but the SEC said the defendants waited from a few months to more than five years to do so.
The defendants include Berjaya Lottery Management, which operates in Kuala Lumpur and arranged the privatization of California-based International Lottery & Totalizator Systems Inc, in which it had a controlling stake.
They also included the Ciabattoni Living Trust and five other defendants involved in taking California-based hospital services company First Physicians Capital Group Inc private; and Shuipan Lin, chief executive of China-based Exceed Co, which makes sports apparel and footwear.
A lawyer for Berjaya declined to comment. Lawyers for the other defendants were not immediately available for comment. (Reporting by Jonathan Stempel; Editing by David Gregorio)
