SEC Issues Order Involving Mark E. Watson III
In the Matter of
ORDER INSTITUTING CEASE-AND-DESIST PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS, AND IMPOSING A CEASE-AND-DESIST ORDER
I.
II.
In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the "Offer") which the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceedings brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to the Commission's jurisdiction over him and the subject matter of these proceedings, which are admitted, and except as provided herein in Section V, Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order"), as set forth below.
III.
On the basis of this Order and Respondent's Offer, the Commission finds/1 that:
Summary
1. This matter arises from Mark E. Watson III's role in
Respondent and Relevant Entity
2. Respondent Mark E. Watson III was the Chief Executive Officer, President and a director of Argo from 2000 until late 2019. His resignation as Argo's Chief Executive Officer and President became effective on
3.
4. In definitive proxy statements disclosing executive compensation paid for 2014 through 2018, which were filed in 2015 through 2019, Argo disclosed a total of approximately
5. However, these same definitive proxy statements failed to disclose over
6. Watson solicited proxies for his election as a director and approval of his compensation by using materials that included these deficient executive compensation disclosures. On certain occasions, Watson did not complete director and officer questionnaires, which were designed to assist with the company's disclosure process and sought information from him regarding perquisites and personal benefits.
7. In
8. From 2015 through 2019, Argo incorporated its definitive proxy statements into its annual reports by reference. Watson signed these annual reports.
9. From 2014 through 2018, Argo incorrectly recorded payments for the benefit of, and reimbursements to, Watson as business expenses, and not compensation, based in part on Watson's submission of certain requests for expense reimbursement and approval of certain company payments to vendors. As a result, Argo's books, records, and accounts did not, in reasonable detail, accurately and fairly reflect its disposition of assets.
10. In
Violations
11. Section 14(a) of the Exchange Act makes it unlawful to solicit any proxy in respect of any security (other than an exempted security) registered pursuant to Section 12 of the Exchange Act in contravention of such rules and regulations as the Commission may prescribe. Rule 14a-3 prohibits the solicitation of proxies without furnishing proxy statements containing the information specified in Schedule 14A, including executive compensation disclosures pursuant to Item 402 of Regulation S-K. Item 402 of Regulation S-K requires disclosure of the total value of all perquisites and other personal benefits provided to named executive officers (including CEOs) who receive at least
12. Section 13(a) of the Exchange Act and Rule 13a-1 thereunder require every issuer of a security registered pursuant to Section 12 of the Exchange Act to file with the Commission, among other things, annual reports as the Commission may require. As a result of its incorporation of deficient proxy statements by reference in its annual reports, Argo violated Section 13(a) of the Exchange Act and Rule 13a-1 thereunder. As a result of the conduct described above, Watson caused these violations.
13. As a result of the conduct described above, Watson caused Argo to violate Rule 12b-20 under the Exchange Act, which requires that, in addition to the information expressly required to be included in a statement or report filed with the Commission, there shall be added such further material information, if any, as may be necessary to make the required statements, in light of the circumstances under which they are made, not misleading.
14. As a result of the conduct described above, Watson caused Argo to violate Section 13(b)(2)(A) of the Exchange Act, which requires reporting companies to make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflect their transactions and dispositions of their assets.
15. As a result of the conduct described above, Watson violated Exchange Act Rule 13b2-1, which prohibits any person from, directly or indirectly, falsifying or causing to be falsified, any book, record, or account subject to Section 13(b)(2)(A) of the Exchange Act.
IV.
In view of the foregoing, the Commission deems it appropriate to impose the sanctions agreed to in Respondent Watson's Offer.
Accordingly, it is hereby ORDERED that:
A. Pursuant to Section 21C of the Exchange Act, Respondent Watson cease and desist from committing or causing any violations and any future violations Sections 13(a), 13(b)(2)(A), and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13b2-1, 14a-3, and 14a-9 thereunder.
B. Respondent shall, within 10 days of the entry of this Order, pay a civil money penalty in the amount of
Payment must be made in one of the following ways:
(1) Respondent may transmit payment electronically to the Commission, which will provide detailed ACH transfer/Fedwire instructions upon request;
(2) Respondent may make direct payment from a bank account via Pay.gov through the
(3) Respondent may pay by certified check, bank cashier's check, or
Accounts Receivable Branch
HQ Bldg.,
Payments by check or money order must be accompanied by a cover letter identifying Mark E. Watson III as a Respondent in these proceedings, and the file number of these proceedings; a copy of the cover letter and check or money order must be sent to
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be treated as penalties paid to the government for all purposes, including all tax purposes. To preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any award of compensatory damages by the amount of any part of Respondent's payment of a civil penalty in this action ("Penalty Offset"). If the court in any Related Investor Action grants such a Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to the
V.
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, 11 U.S.C. Sec.523, the findings in this Order are true and admitted by Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other amounts due by Respondent under this Order or any other judgment, order, consent order, decree or settlement agreement entered in connection with this proceeding, is a debt for the violation by Respondent of the federal securities laws or any regulation or order issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. Sec.523(a)(19).
By the Commission.
* * *
Footnotes:
1/ The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person or entity in this or any other proceeding.
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