November 1, 2022

Chemical Manufacturer Settles Charges for Misleading Statements on Company Debt

A chemical manufacturer settled SEC charges for making materially misleading statements to investors and the public regarding the company's debt reduction efforts.

According to the Order, the SEC found that the company delayed payment of overdue invoices until after the end of the relevant financial reporting period. The SEC found that the company did this to reflect a reduced debt total on its quarterly reports. The SEC said that the company periodically presented investors with progress reports reflecting an ongoing effort to reduce its debt, but by delaying the overdue payments to vendors just long enough after the financial reporting period, the firm materially misled investors about its actual debt reduction efforts.

As a result, the SEC determined that the company violated Securities Act Section 17(a)(3) ("Fraudulent interstate transactions"), Exchange Act Section 13(a) ("Periodical and other reports"), SEA Rule 12b-20 ("Registration and Reporting - Additional information"), SEA Rule 13a-11 ("Current reports on Form 8-K"), as well as Regulation G Rule 100(b) ("General rules regarding disclosure of non-GAAP financial measures"). To settle the charges, the company agreed to (i) cease and desist and (ii) pay a civil monetary penalty of $1,300,000.