THE FREQUENT FILER

Please Stop Committing Crimes

The year 1995 gave way for one of the greatest crime dramas ever to grace a cinema screen. Heat. A story about a grizzled LAPD detective going on an elaborate chase of a group of high-end professional thieves. It stars Al Pacino and Robert De Niro, is directed by Michael Mann, and is cinematic perfection *Chefs Kiss*.

It’s your classic cat-and-mouse chase, but spoiler alert, the mouse does not get away. In fact, if we are being honest, the mouse rarely gets away. No matter how many plans the mouse makes. They all get got sooner or later. The lesson….DO NOT BE THE MOUSE.

What does that mean?

It means avoid putting yourself in situations where the cat (the SEC) has reasons to chase you. The SEC has indicated that it intends to maintain an active enforcement program focused on high-impact cases. In fact, the SEC reported that its enforcement program imposed financial penalties in a higher number in 2023 than for most years in recent memory.

SEC Chair Gary Gensler has pursued a robust rulemaking agenda, including financial-, climate-, and social-related disclosures, shareholder proposals, and asset management. So basically, the SEC is NOT playing games!

Don’t believe me? Well, let’s see some examples:

  1. March 12, 2024 – The SEC charged a former board member and four of his friends with insider trading. All five defendants agreed to settlements that included $2.2 million in disgorgement, prejudgment interest, and civil penalties.1
  2. March 7, 2024 – A footwear company based in California was charged with failing to disclose payments for the benefit of its executives and their immediate family members. The civil penalty was $1.25 million.2
  3. September 27, 2023 – Charges against officers, directors, and shareholders of public companies for failing to report their holdings and transactions were announced. Penalties for individuals ranged from $66,000 to $190,000.3
  4.  

These are just a few of the many charges the SEC produces against companies and/or individuals. Even providing false information via social media can get someone caught up.4 Notice the pattern, other than insider trading, which is obviously a big no-no, many SEC charges come from a failure to disclose information. Some people don’t know what and when to report, but ignorantia juris non excusat. That is Latin for “ignorance of the law excuses not.”

The Solution.
Well, if you are in the business of disregarding basic rules and regulations, maybe stop doing what you’re doing. As for the rest of us who aren’t deviants, who genuinely get lost in the financial laws of the land, a corporate attorney can help keep track of essential deadlines and disclosure requirements.

Most of these HEFTY fines come from forgetting to disclose information. You forget once, then twice, then it snowballs, and that’s when the SEC will decide to knock on your door.

“Only a fool learns from his own mistakes. The wise man learns from the mistakes of others.” – Otto von Bismarck

Take these lessons as a warning. Everyone gets caught eventually, so why take the risk?

In the most famous scene of Heat Al Pacino’s LAPD character and Robert De Niro’s criminal character are sitting in a restaurant foreshadowing the events to come. Pacino tells De Niro, “Brother, you are going down.” Moments later, De Niro with a subtle smile says, “Or maybe we’ll never see each other again.” Regardless of the optimism, they did see each other again and to the demise of DeNiro. No matter how sure you are, the SEC will catch up with you if you are doing the wrong thing. Knowingly or unknowingly. So please stop committing crimes because the consequences are never worth it.

RELATED SERVICES AND SOLUTIONS

EDGAR Conversion

XBRL Solutions

David Jackson

Assistant Manager - Typeset

David Jackson has 5+ years of experience in the Financial Services industry and is currently the Assistant Manager of Typeset at EdgarAgents. He’s a die-hard Knicks fan who thinks a championship is right around the corner. He clearly also believes in miracles.