The Securities and Exchange Commission announced that the former CEO of a marketing company has agreed to pay $5.5 million to settle charges that his perks were not properly disclosed to shareholders.
According to the SEC, public companies must properly disclose perks, benefits and other forms of compensation paid to CEOs and certain other highly compensated executive officers.
The SEC’s order says that shareholders were informed in annual filings that Miles S. Nadal received an annual perquisite allowance of $500,000 in addition to other benefits as the chairman and CEO of MDC Partners.
However, the SEC’s investigation found that without disclosing information to investors as required, MDC Partners paid for Nadal’s personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery and a wide range of other perks.
All total, Nadal improperly obtained an additional $11.3 million in perks beyond his disclosed benefits and $500,000 annual allowances. He has since resigned and returned $11.3 million to the company.
MDC Partners agreed to a $1.5 million settlement earlier this year for its role in the perk disclosure failures.
“Perks paid to corporate executives should be properly disclosed so that investors can make informed decisions,” said G. Jeffrey Boujoukos, Director of the SEC’s Philadelphia Regional Office, in a statement. “Nadal improperly received and failed to disclose millions of dollars in compensation.”
Nadal consented to the SEC’s order without admitting or denying the findings and agreed to pay $1.85 million in disgorgement plus $150,000 in interest and a $3.5 million penalty. He also agreed to be barred from serving as an officer or director of a public company for five years.
Law Firm Partner and Neighbor Charged in $1 Million Insider Trading Scheme
The SEC charged a former partner at an international law firm and his neighbor with making more than $1 million in illicit profits by insider trading around corporate announcements.
The SEC alleges that Walter C. Little accessed confidential documents on his law firm’s internal computer network related to at least 11 impending announcements involving law firm clients, none of which he personally advised or billed for services.
According to the SEC, Little then allegedly traded in advance of each announcement and often tipped his neighbor Andrew M. Berke with material nonpublic information so he could similarly trade in company stocks before the announcements were made publicly. According to the SEC’s complaint, the insider trading occurred from February 2015 through February 2016.
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Little and Berke.
The SEC’s complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, penalties, and permanent injunctions.
SEC Files Subpoena Enforcement Against Attorney
The SEC filed a subpoena enforcement action in the U.S. District Court for the Central District of California against Andrew T.E. Coldicutt and the Law Offices of Andrew Coldicutt.
The SEC is investigating whether Coldicutt, or others associated with various publicly traded companies, may have engaged in antifraud and securities registration violations by participating in filing registration statements which contain false information about those companies’ control persons or promoters.
The SEC’s court filings also state that Coldicutt is the author of attorney opinion letters that are potentially false and misleading and that may be part of unregistered distributions of securities.
As part of its investigation, the SEC staff served Coldicutt and his law firm with subpoenas requiring the production of documents. According SEC’s application, Coldicutt and his law firm have failed either to produce all responsive documents or provide sufficient information to support withholding various documents on the basis of a legal privilege. The SEC’s application seeks an order from the court compelling Coldicutt and the law firm to provide additional information to support their refusal to produce certain documents on the basis of attorney-client privilege.
The SEC is continuing its fact-finding investigation and, to date, has not concluded that anyone has violated the securities laws.
SEC Obtains Judgments in Grand Empire Palace and Resort Bond Offering Fraud
The SEC announced that it obtained final judgments against Matthew E. White, Rodney A. Zehner, Daniel J. Merandi and their six affiliated corporate entities.