The Securities and Exchange Commission has charged cosmetics company Revlon with violating federal securities laws based on allegations it misled shareholders in a "going private" transaction.
According to an SEC posting Thursday, Revlon has agreed to pay an $850,000 penalty to the SEC but neither admits nor denies the SEC's findings.
According to the SEC, Revlon engaged in "ring fencing," or creating informational barriers that deprived board members and shareholders of crucial financial knowledge. According to the SEC, in 2009, Revlon's controlling shareholder, MacAndrews and Forbes, asked the company to offer shareholders the option to exchange common shares for preferred shares. The exchanged shares would then be provided to M&F to pay down Revlon's debt. A third-party financial advisor evaluated the adequacy of the plan, but the company did not reveal to shareholders that the advisor deemed the deal inadequate, alleges the SEC.
Antonia Chion, the SEC's associate director of the division of enforcement, said in statement that a company's privatization efforts can "create opportunities for shareholder abuse and can have coercive effects on minority shareholders. By erecting informational barriers, Revlon kept critically important information from its board and, in turn, misled investors."
The article Revlon Pays $850,000 SEC Fine Over Allegations It Withheld Information originally appeared on Fool.com.Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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