The SEC requires public companies to disclose information and data that may be important to potential investors and shareholders of the company. On February 6, 2019, the SEC’s Division of Corporation Finance released two Compliance and Disclosure Interpretations ("CDIs")that discussed disclosure requirements for instances when board nominees or directors self-identify with specific diversity characteristics such as, race, gender, ethnicity, religion, sexual orientation, nationality, disability, and cultural background. In such instances, the SEC expects the public company to identify those characteristics and include how they were considered as long as the director or nominee consents to such disclosures.
Read MoreOn March 14, 2019, the Securities and Exchange Commission (“SEC”) charged Volkswagen AG,two of its subsidiaries, and its former CEO, Martin Winterkorn, with fraud in connection with a 2015 scandal commonly known as “dieselgate.” (SEC, Press Release). “Dieselgate” was a fraudulent scheme, masterminded by Winterkorn, under which Volkswagen marketed environmentally-friendly diesel engine vehicles that, in reality, emitted pollutants at levels 40-times greater than the legal limit in the United States. (SEC, Complaint). The parties were charged with violating the following federal securities laws: Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, SEC Rule 10b-5(b), and Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933. (Id.).
Read MoreOn April 2, 2019 the founder and former Chief Executive Officer of Jumio Inc., Daniel Mattes, agreed to settle with the Securities Exchange Commission (SEC) for more than $17 million for defrauding investors. (Govind, Bloomberg). According to the SEC, Mattes “grossly overstated” Jumio’s 2013 and 2014 revenues before selling his personal shares to private investors. (Press Release, SEC). Mattes’ settlement with the SEC followed shortly after another SEC settlement with Jumio’s former Chief Financial Officer, Chad Starkey. Starkey also settled charges for failing to exercise reasonable care concerning the company’s financial statements and signing stock transfer agreements that falsely implied Jumio’s board of directors had agreed to Mattes’ sale of his private shares. Id. After Mattes’ shares were sold, Jumio restated its financial results in 2015, which showed depleted revenues and led to the company filing for bankruptcy. (Govind, Bloomberg).
Read MoreOn March 25, 2019 car rental giant Hertz Corporation filed a complaint against its former CEO (Mark Frissora), CFO (Elyse Douglas), and General Counsel (John Zimmerman) pursuant to its Compensation Recovery Policy (“Hertz Clawback Provisions”).Hertz Corp. v. Frissora, No. 2:19-cv-08927 (D.N.J. Mar. 25, 2019). In the complaint, Hertz invoked its Hertz Clawback Provisions against its three former executives to recover incentive compensation that was paid to the executives between 2011 and 2013. Id. at 1. Specifically, the Hertz Clawback Provisions, which were denoted in all three of the prior executives’ employment contracts, required its former executives to forfeit any previously awarded incentive compensation if their “gross negligence and misconduct” resulted in a restatement in the company’s financial statements.
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