OPINION OF THE COMMISSION
SECTION 12(j) PROCEEDING
Grounds for Remedial Action
Failure to Comply with Periodic Filing Requirements
Certain companies failed to file periodic reports in violation of Section 13(a) of the Securities Exchange Act of 1934 and Exchange Act Rules 13a-1 and 13a-13. Held, it is in the public interest to revoke the registration of those companies' securities.
(collectively, "Respondents"), issuers with classes of securities registered with the Commission, each failed to file an answer in response to an order instituting proceedings (the "OIP") alleging that they did not file required periodic reports./1
Respondents again failed to respond to an order to show cause why they should not be found in default./2
We now find Respondents to be in default, deem the allegations of the OIP to be true, and revoke the registrations of their securities.
A. The Commission issued an order instituting proceedings against Respondents alleging that they violated the Securities Exchange Act of 1934 and the rules thereunder by failing to file required periodic reports.
As explained in the OIP, Exchange Act Section 13(a) and the rules promulgated thereunder require issuers of securities registered pursuant to Exchange Act Section 12 to file with the Commission current and accurate information in periodic reports./4
The periodic reports are required to be filed even if the registration is voluntary under Section 12(g)./5
Specifically, Rule 13a-1 requires issuers to file annual reports, and Rule 13a-13 generally requires domestic issuers to file quarterly reports./6
These requirements are imposed "for the proper protection of investors and to insure fair dealing" in an issuer's securities./7
A violation of these provisions does not require scienter./8
The OIP alleges that all of the Respondents are delinquent in their periodic filings with the Commission because they have repeatedly failed to meet their obligations to file timely periodic reports. The OIP further alleges that Respondents also failed to heed delinquency letters sent to them by the
Specifically, the OIP alleges that
The OIP also alleges that
The OIP also alleges that
The OIP directed Respondents to file an answer to the allegations contained therein within ten days after service, as provided by Rule 220(b) of the Commission's Rules of Practice./9
The OIP informed Respondents that if they failed to answer, they may be deemed in default, the proceedings may be determined against them upon consideration of the OIP, and the allegations in the OIP may be deemed to be true as provided in the Rules of Practice./10
B. Respondents failed to answer the OIP or respond to a show cause order.
Respondents were each properly served with the OIP, but none answered it. On
Respondents were warned that if they "fail[ed] to respond to th[e] order to show cause, they may be deemed in default, the proceeding may be determined against them, and their securities may be revoked." No Respondent subsequently answered the OIP or responded to the show cause order.
A. We hold Respondents in default, deem the OIP's allegations to be true, and find that Respondents violated the Exchange Act by failing to file required periodic reports.
Rule of Practice 220(f) provides that "[i]f a respondent fails to file an answer required by this rule within the time provided, such respondent may be deemed in default pursuant to Rule 155(a)."/12
Rule 155(a) permits the Commission to deem such a respondent in default and "determine the proceeding against [it] upon consideration of the record, including the order instituting proceedings, the allegations of which may be deemed to be true."/13
Because Respondents have failed to answer, and have not responded to the order to show cause, we find it appropriate to deem them in default and to deem the allegations of the OIP to be true as to Respondents.
The OIP alleges that each Respondent had a class of securities registered with the Commission under Exchange Act Section 12(g), and that each has failed to file required annual and quarterly reports. The allegations of the OIP, deemed true, establish that each Respondent violated Exchange Act Section 13(a) and the rules thereunder./14
B. We deem it necessary and appropriate to revoke the registration of all classes of Respondents' registered securities.
Section 12(j) authorizes us as we deem "necessary or appropriate for the protection of investors" to suspend for 12 months or less or revoke the registration of an issuer's securities that has failed to make required filings./15
We apply a multifactor test to determine an appropriate sanction:
[W]e will consider, among other things, the seriousness of the issuer's violations, the isolated or recurrent nature of the violations, the degree of culpability involved, the extent of the issuer's efforts to remedy its past violations and ensure future compliance, and the credibility of its assurances, if any, against further violations./16
Although these factors are nonexclusive, and no single factor is dispositive,/17 "[w]e have held that a respondent's repeated failure to file its periodic reports on time is 'so serious' a violation of the Exchange Act that only a 'strongly compelling showing' regarding the other
Respondents' violations were recurrent in that they each have failed to file required annual and quarterly reports for over eighteen years or more./19
These violations were serious because "reporting requirements are the primary tools which
An issuer's failure to file periodic reports violates "a central provision of the Exchange Act, . . . depriv[ing] both existing and prospective holders of its registered stock of the ability to make informed investment decisions based on current and reliable information."/21
Respondents' "'long history of ignoring . . . reporting obligations' evidences a 'high degree of culpability.'"/22
And because Respondents failed to answer the OIP or respond to the show cause order, they have submitted no evidence of any efforts to remedy their past violations and ensure future compliance. Nor have they made any assurances against further violations.
Accordingly, each of the factors we analyze favors revocation. Respondents have failed to make a "strongly compelling showing" to justify another sanction. We find it necessary and appropriate for the protection of investors to revoke the registration of all classes of Respondents' registered securities.
An appropriate order will issue.
By the Commission (Chairman CLAYTON and Commissioners JACKSON, PEIRCE, ROISMAN, and LEE).
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3/ 15 U.S.C. Sec. 78l(j).
4/ 15 U.S.C. Sec.Sec. 78m(a), 78l, 78l(g).
6/ 17 C.F.R. Sec.Sec. 240.13a-1, .13a-13.
7/ 15 U.S.C. Sec. 78m(a).
8/ Advanced Life Scis.
9/ 17 C.F.R. Sec. 201.220(b).
10/ See Rule of Practice 155(a), 17 C.F.R. Sec. 201.155(a).
11/ See supra note 2.
12/ 17 C.F.R. Sec. 201.220(f).
13/ 17 C.F.R. Sec. 201.155(a) (specifically authorizing such action where a respondent fails "[t]o answer . . . or otherwise to defend the proceeding").
14/ See supra notes 4-8 and accompanying text.
15/ 15 U.S.C. Sec. 78l(j).
16/ Gateway Int'l
19/ See, e.g., Accredited Bus.
21/ Accredited Bus. Consolidators, 2015 WL 5172970, at *2; see also
22/ See, e.g.,