Issuer Settles SEC Charges for False and Misleading Statements on Director Independence

An issuer settled SEC charges for material misstatements and omissions in public filings concerning "the independence of members of its board of directors, the independence of board committees, and the existence of interlocking relationships between its directors and executive officers."

According to the SEC, the company's board concluded in April 2019 that its newly appointed independent director ("New Director") was "an 'independent director' within the meaning of the listing standards of the NYSE and the Rules of the SEC." However, in September 2019, the New Director became chief financial officer of a third-party public company on whose board and compensation committee the firm's CEO also served. As a result, the New Director was not independent under the NYSE standards.

The company's 2019 10-K in its Schedule 14A proxy statement ("2020 Proxy Statement") materially misstated that (i) all of its board members, including the New Director, were "independent" and "independent under NYSE listing standards," (ii) all of its standing board committees, including the Strategic Review Committee chaired by the New Director, were "comprised solely of directors who are considered independent under all applicable NYSE listing standards," and (iii) "[n]o interlocking relationships [(A)] exist, or [(B)] at any time during fiscal 2019 existed, between any member of our Board . . . and any member of the board of directors or compensation committee of any other company." These various mistakes were then incorporated into other regulatory filings.

As a result of these actions, the SEC determined that the firm violated Exchange Act Rule 13a-15(a) ("Controls and procedures"), and Rules 13a-1 ("Requirements of annual reports"), 13a-11 ("Current reports on Form 8-K") and 12b-20 ("Additional information"). The SEC also determined that the Issuer violated Exchange Act Section 14(a)(3) ("Information to be furnished to security holders") and Rule 14a-9 ("False or misleading statements").

To settle the charges, firm agreed to (i) cease and desist from committing any violations and any future violations, and (ii) pay a civil money penalty in the amount of $325,000.

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