The SEC brought an enforcement action against Raul S. McQuivey,an officer and director of Sutron Corporation (Sutron) and as a greater than 10% beneficial owner of Sutron’s registered common stock, for: (1) violating Section 13(g) of the Securities Exchange Act of 1934 on multiple occasions by failing to timely file required amendments to the Schedule 13G; and (2) Section 16(a) on multiple occasions by failing to timely file reports of holdings and transactions in Sutron’s securities.
Under Section 13(g) of the 1934 Act and the operation of Rule 13d-1(d), any person who, as of the end of a calendar year, is directly or indirectly the beneficial owner of more than 5% of any equity security of a class registered under Section 12 of the 1934 Act, and who has not made an acquisition subject to Section 13(d), must publicly file with the SEC a disclosure statement containing the information specified by Schedule 13G within 45 days after the end of the calendar year in which the obligation arises. Rule 13d-2(b) under the 1934 Act requires that a person filing a Schedule 13G pursuant to Rule 13d-1(d) must file an annual amendment within 45 days after the end of each calendar year if there are any changes in the information reported in the previous filing on that Schedule, unless certain limited exceptions apply.
The SEC stated that McQuivey has been subject to the reporting requirements of 1934 Act. Section 13(g) and Rules 13d-1(d) and 13d-2(b) since December 31, 1984 as a beneficial owner of more than 5% of Sutron’s common stock. McQuivey filed an initial Schedule 13G statement in 1984 and an amendment in 1985. McQuivey did not file any subsequent amendments to his Schedule 13G until after the SEC's enforcement staff contacted him regarding his failure to file.
McQuivey was required to file annual amendments to his Schedule 13G to reflect any changes to the information previously reported. As a result, McQuivey violated Section 13(g) of the 1934 Act and Rule 13d-2 thereunder.
Section 16(a) of the 1934 Act and the rules promulgated thereunder apply to every person who is the beneficial owner of more than 10% of any class of any equity security registered pursuant to Section 12 of the 1934 Act, and any officer or director of the issuer of any such security (called insiders).
Pursuant to Section 16(a) and Rule 16a-3, insiders are required to file initial statements of holdings on Form 3 and keep this information current by reporting transactions on Forms 4 and 5. Specifically, within 10 days after becoming an insider, or on or before the effective date of the Section 12 registration of the class of equity security, an insider must file a Form 3 report disclosing his or her beneficial ownership of all securities of the issuer. To keep this information current, insiders must file Form 4 reports disclosing transactions resulting in a change in beneficial ownership within two business days following the execution date of the transaction, except for limited types of transactions eligible for deferred reporting. Transactions required to be reported on Form 4 include purchases and sales of securities, exercises and conversions of derivative securities, and grants or awards of securities from the issuer. In addition, insiders are required to file an annual statement on Form 5 within 45 days after the issuer’s fiscal year-end to report any transactions or holdings that should have been, but were not, reported on Form 3 or 4 during the issuer’s most recent fiscal year and any transactions eligible for deferred reporting (unless the corporate insider has previously reported all such transactions).
Rule 16a-1(f) defines the term “officer” to include an issuer’s president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-president of the issuer in charge of a principal business unit, division or function, and any other officer who performs a policy-making function.
The SEC found that McQuivey failed to file since 1984 all Section 16(a) reports with the SEC for his reportable holdings and transactions in Sutron’s common stock until after the Commission’s enforcement staff contacted him regarding his failure to file. McQuivey filed 18 Forms 4 and 11 Forms 5 on May 20, 2014 to report his previously unreported transactions dating back to 2002. These transactions primarily consist of option grants, option exercises, and gifts of common stock, and include transactions.
As a result, McQuivey violated Section 16(a) of the Exchange Act and Rule 16a-3 thereunder.
The SEC stated that there is no state of mind requirement for violations of Sections 16(a) and 13(g) and the rules thereunder. The failure to timely file a required report, even if inadvertent, constitutes a violation.
The SEC fined McQuivey $60,000 for his violations.
Click http://www.sec.gov/litigation/admin/2014/34-73064.pdf to access the administrative action.