Fund Manager Failed to Make Section 16 Filings
A private fund manager and its principals were sanctioned for failing to make Section 16 ownership filings in addition to other alleged violations. According to the SEC, the fund acquired more than 10% of a registered security. However, the fund manager never made the required Form 4 filings, which are required with respect to every acquisition or disposition transaction in the subject securities. The investee company properly reported the failure in its Form 8-K. The SEC also charged violations related to marking the close and improper affiliate transactions. The firm’s principal was barred from the industry and agreed to pay a fine.
OUR TAKE: Many investment managers forget or don’t know their Section 16 reporting obligations when acquiring more than 10% of a firm’s equity securities. Because every company must report Section 16 failures, the SEC has a record of all missteps.