SEC Charges Esmark and Chairman with False Tender Offer for U.S. Steel

The Securities and Exchange Commission (SEC) has settled charges against Esmark Inc. and its founder, James P. Bouchard, for announcing a fraudulent tender offer to purchase U.S. Steel Corporation. The announcement came on September 6, 2024, following an investigation into the company's 2023 acquisition attempt.

According to the SEC's order, on August 14, 2023, Esmark publicly announced an offer to purchase all outstanding shares of U.S. Steel for $35 per share, a deal that would have required $7.8 billion in cash. The following day, Bouchard, who serves as Esmark's chairman and former CEO, appeared on a cable news program claiming the company had $10 billion in committed cash for the deal and would not use any of Esmark's assets as collateral.

The SEC found these statements to be false, as Esmark did not have the necessary funds to complete the purchase. The regulatory body concluded that neither Esmark nor Bouchard had a reasonable belief that they possessed the means to fulfill the announced tender offer.

Antonia M. Apps, Director of the SEC's New York Regional Office, emphasized the importance of truthful corporate communications, stating, "Investors should be able to trust companies' and executives' public statements."

The SEC's order determined that Esmark and Bouchard violated Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-8 thereunder. Without admitting or denying the findings, both parties agreed to cease and desist from future violations of these provisions.

As part of the settlement, Esmark will pay a civil penalty of $500,000, while Bouchard will personally pay $100,000.

This case underscores the SEC's ongoing efforts to maintain market integrity and protect investors from misleading corporate communications, particularly in high-profile acquisition attempts that can significantly impact stock prices and investor decisions.

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