SEC Charges Corporate Insiders and Companies for Late Reporting of Stock Transactions

The Securities and Exchange Commission (SEC) has taken enforcement action against six officers, directors, and major shareholders of publicly-traded companies for failing to promptly report information about their holdings and stock transactions. Additionally, five publicly-traded companies are facing charges for either contributing to their insiders' reporting delays or neglecting to report their insiders' filing delinquencies.

This move by the SEC is part of an enforcement initiative centered on Form 4, Schedules 13D, and 13G reports, which corporate insiders are obligated to file regarding their company stock holdings and transactions. Form 4 is specifically designed for corporate officers, directors, and significant beneficial owners (holding more than 10 percent of a registered class of a company's stock) to report their stock transactions within two business days. Schedules 13D and 13G are reports for beneficial owners with more than 5 percent ownership in a company's registered stock class to disclose their holdings and intentions concerning the company.

The purpose of these mandatory ownership reports is to provide investors and market participants with insight into whether insider activity could be indicative of a company's future prospects. The SEC utilized data analytics to identify insiders who repeatedly filed these reports late, with some filings being delayed for weeks, months, or even years. The reporting requirements apply irrespective of whether the trades were profitable or the reasons behind the transactions.

Gurbir S. Grewal, Director of the SEC's Enforcement Division, emphasized the significance of timely insider transaction disclosure for both investors and the integrity of the securities markets. He pointed out that the charged insiders and companies collectively deprived investors of timely information regarding over $90 million in transactions. Furthermore, Grewal made it clear that the SEC would not hesitate to hold companies accountable for the reporting violations of their insiders, especially if the companies undertook responsibility for filing on behalf of their insiders and acted negligently.

Sanjay Wadhwa, Deputy Director of the SEC's Division of Enforcement, reinforced the message that reporting obligations under securities laws are not optional. Filing required forms in a timely manner is mandatory, and there are repercussions for failure to do so.

Penalties and Individuals Charged:

Without admitting or denying the findings, the following individuals and companies have agreed to cease and desist from violating the charged provisions and pay the specified civil penalties:

1. Nicole M. Fernandez-McGovern, CFO of AgEagle Aerial Systems Inc. - $125,000
2. Matthias L. Heilmann, former President and CEO of Digital Solutions within Baker Hughes Co. - $143,000
3. Joseph Theodore Lukens, Jr., a beneficial owner of Workhorse Group Inc. - $120,000
4. Avery More, a director of SolarEdge Technologies, Inc. - $66,000
5. Lawrence I. Rosen, a beneficial owner of multiple companies - $150,000
6. Peixin Xu, a director and beneficial owner of Cineverse Corporation - $150,000

Companies Facing Penalties:

1. AgEagle Aerial Systems Inc. - $190,000
2. Cumberland Pharmaceuticals Inc. - $200,000
3. eXp World Holdings, Inc. - $115,000
4. Lattice Semiconductor Corporation - $185,000
5. SolarEdge Technologies, Inc. - $125,000

These actions by the SEC underscore the regulatory agency's commitment to upholding the timely reporting of insider transactions and holdings, ensuring transparency in the marketplace, and protecting the interests of investors.