SEC makes final judgment on Lupo Securities
SEC makes final judgment against Lupo Securities, orders Lupo Securities to pay $75,000 civil penalty and refund $420,000。
The U.S. Securities and Exchange Commission (SEC) has issued a final judgment in the Lupo Securities LLC case.。
On December 4, 2023, Judge John Robert Blakey of the Northern District Court of Illinois signed the final judgment against Lupo Securities.。
The court ordered that the defendant be permanently restrained and prohibited from violating Rule 14e-4 promulgated by the Securities Exchange Act of 1934 (the "Exchange Act") [17 C.F.R.§ 240.14e-4], that is, acting alone or in concert with others, directly or indirectly bidding for any underlying securities for one's own account in a partial tender offer, and its net long position is not equal to or greater than the tender amount of the underlying securities or equivalent securities。
Under section 21 (d) (3) of the Exchange Act [15 U.S.C.§ 78u (d) (3)], the defendant shall refund the net profit of $420,000 and its estimated interest of $55,000 as a result of the actions alleged by the plaintiff, and a civil penalty of $75,000。
The ruling ends the SEC's July 2021 lawsuit.。The SEC lawsuit alleges that Lupo Securities, LLC violated the so-called "short offer rule" by pocketing its own money at the expense of other participants in the partial offer.。
According to the SEC's allegations, as part of a partial tender offer for Lockheed Martin's common stock in 2016, Lockheed's stock, which was tendered by Lupo, an SEC-registered broker-dealer at the time, exceeded the net value it owned, in violation of short tender offer rules.。
Since a portion of the shares offered for acquisition is less than the entire outstanding shares of the securities, the offeror will accept the shares on a pro rata basis in the event of oversubscription of a portion of the offer。
In this case, Lockheed's partial tender offer was oversubscribed, while the complaint alleges that Lupo acquired Leidos Holdings, Inc..
As a result of this action, Lupo acquired about 610,000 more shares of Leidos than it would have received in compliance with the short offer rules, the complaint said.。
The SEC complaint alleges that Lupo violated Section 14e-4 of the Securities Exchange Act of 1934.。
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