SEC Charges Corporate Insiders for Failing to Timely Report Transactions and Holdings

The Securities and Exchange Commission (SEC) has announced charges against six individuals who served as officers, directors, or major shareholders of publicly traded companies for their failure to promptly report information related to their ownership and transactions in company stock. Additionally, five publicly traded companies have been charged for either enabling the filing lapses of insiders or not disclosing their insiders’ delinquencies in filings.

These charges are a result of the SEC’s enforcement initiative targeting the reporting of Form 4, Schedules 13D, and 13G, which are mandatory reports that company insiders must submit regarding their holdings and transactions involving company stock. Form 4 is used by corporate officers, directors, and specific beneficial owners with over 10 percent ownership of a registered class of company stock to report their stock transactions within two business days. Schedules 13D and 13G are reports that beneficial owners with over 5 percent ownership of a registered class of company stock must file to disclose their holdings and intentions concerning the company. These reports offer investors and market participants valuable insights into whether insider actions might indicate the company’s future prospects. The SEC’s enforcement team utilized data analytics to identify individuals who repeatedly filed these reports late, with some filings delayed for weeks, months, or even years. Importantly, the reporting requirements are binding irrespective of whether the transactions were profitable or the reasons behind them.

Gurbir S. Grewal, Director of the SEC’s Enforcement Division, emphasized the critical significance of timely insider transaction disclosures for both investors and the effective functioning of securities markets. He noted that the individuals and companies involved in these charges collectively deprived investors of timely information about transactions totaling over $90 million. Grewal also stressed that companies will be held accountable for their role in causing their insiders’ disclosure violations if they took on the responsibility for making relevant filings and then acted negligently.

Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement, pointed out that this enforcement action serves as a reminder that reporting obligations under securities laws are not optional, and there are consequences for failing to file required forms punctually.

The individuals and companies involved have agreed to cease and desist from violating the respective charged provisions and pay civil penalties as follows:

Individuals:

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:

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