The SEC charged eight companies for failing to disclose in SEC Form 12b-25 filings that their request for seeking a delayed quarterly or annual reporting filing was caused by an anticipated restatement or correction of prior financial reporting. The violations were uncovered by an initiative focused on Form 12b-25 filings by companies that quickly thereafter announced financial restatements or corrections. Each of the companies was a public reporting company at the time of the violations and agreed to settle the Commission’s charges and pay civil penalties.
Public companies are required to file the SEC’s Form 12b-25 “Notification of Late Filing,” commonly known as “Form NT,” when “not timely” filing a Form 10-Q or Form 10-K and seeking additional days to file their reports. Companies must disclose on the Form NT why their quarterly or annual report could not be filed on time, as well as any anticipated, significant changes in results of operations from the corresponding period for the last fiscal year. The SEC orders find that each of the companies announced restatements or corrections to financial reporting within 4-14 days of their Form NT filings despite failing to provide details disclosing that anticipated restatements or corrections were among the principal reasons for their late filings. The orders also find that the companies failed to disclose on Form NT, as required, that management anticipated a significant change in quarterly income or revenue.
“As today’s actions show, we will continue to use data analytics to uncover difficult to detect disclosure violations,” said Melissa R. Hodgman, Acting Director of the SEC’s Enforcement Division. “Targeted initiatives like this allow us to efficiently address disclosure abuses that have the potential to undermine investor confidence in our markets if left unaddressed.”
“Reporting companies are required to provide investors with timely, accurate, and full information with which investors can evaluate the significance of reporting delays,” said Anita B. Bandy, Associate Director in the SEC’s Enforcement Division. “In these cases, due to the companies’ failure to include required disclosure in their Form 12b-25, investors relying on the deficient Forms NT were kept in the dark regarding the unreliability of the company’s financial reporting or anticipated material changes in operating results.”
The SEC’s orders find that the following listed companies violated Section 13(a) and Rule 12b-25 under the Securities Exchange Act of 1934 by failing to make the required Form NT disclosures. Without admitting or denying the findings, the companies agreed to cease-and-desist-orders that made the following findings and require payment of the following penalties:
Fortem Resources, Inc. (FTMR) – Filed one deficient Form NT. The British Columbia-based company agreed to pay a penalty of $25,000.
TruTankless, Inc. (TKLS) – Filed one deficient Form NT. The Arizona-based company agreed to pay a penalty of $25,000.
ShiftPixy, Inc. (PIXY) – Filed one deficient Form NT. The Florida-based company agreed to pay a penalty of $25,000.
Rokk3r, Inc. (ROKK) – Filed one deficient Form NT and filed one untimely Form 8-K. The Florida-based company, now private, agreed to pay a penalty of $50,000.
Daniels Corporate Advisory Company, Inc. (DCAC) – Filed one deficient Form NT. The New York-based company agreed to pay a penalty of $25,000.
HQDA Elderly Life Network Corp. (HQDA) – Filed two deficient Forms NT. The California-based company agreed to pay a penalty of $50,000.
Asta Funding, Inc. (ASTA) – Filed one deficient Form NT and filed one Form 10-Q outside the extension period. The New Jersey-based company, now private, agreed to pay a penalty of $50,000.
Igen Networks Corp. (IGEN) – Filed one deficient Form NT. The California-based company agreed to pay a penalty of $25,000.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.