Advisor Fined for Failing to Timely Amend Schedule 13D Filing
Section 13(d) of the Exchange Act is one of the key disclosure provisions of the federal securities laws. Generally, it requires those who acquire substantial shareholdings in an issuer to file a schedule which informs the markets of the holdings. There are various types of schedules, however. Under Rule 13(d)-1(b), for example, persons required to file a Schedule 13D may elect to file a short-form Schedule 13G if the securities were acquired and held in the ordinary course of business and not for the purpose of influencing control of the issuer. If the filer later changes its intent or purpose to try and influence control, a Schedule 13D must be filed within the designated time period.
Recently, the Commission filed a settled proceeding involving a registered investment adviser who failed to timely file the appropriate schedule. In the Matter of HG Vora Capital Management, LLC, Adm. Proc. File No. 3-21881 (March 1, 2024). The proceedings center on the acquisition of shares in a large, publicly traded Truck Rental firm. At the end of December 2021 Vora Capital held about 5.6% of Truck Rental. The adviser filed a Schedule 13G in February 2022, disclosing its holdings.
From January through mid-April 2022 the adviser purchased another 2,050,000 shares of Truck Rental. This brought the adviser’s holdings to 5,050,000 or about 9.9%. By late April the adviser altered its purpose for holding the shares from passive investor to one with the intent to change or influence control of the issuer. The change of intent was not reported, however, until May 13, 2022, about one week after the Schedule was required to be amended under the then applicable 10 day period. The filing was made the same date HG Vora provided to Truck Rental a notice to acquire all of its shares at a 20% premium to market. By delaying the filing, the advisor violated Exchange Act Section 13(f)(1) and Rule 13d-1 thereunder.
To resolve the proceedings Respondent consented to the entry of a cease-and-desist order based on the Section and Rule cited. The firm also agreed to pay a penalty in the amount of $950,000.
Advisor Fined for Failing to Timely Amend Schedule 13D Filing
Section 13(d) of the Exchange Act is one of the key disclosure provisions of the federal securities laws. Generally, it requires those who acquire substantial shareholdings in an issuer to file a schedule which informs the markets of the holdings. There are various types of schedules, however. Under Rule 13(d)-1(b), for example, persons required to file a Schedule 13D may elect to file a short-form Schedule 13G if the securities were acquired and held in the ordinary course of business and not for the purpose of influencing control of the issuer. If the filer later changes its intent or purpose to try and influence control, a Schedule 13D must be filed within the designated time period.
Recently, the Commission filed a settled proceeding involving a registered investment adviser who failed to timely file the appropriate schedule. In the Matter of HG Vora Capital Management, LLC, Adm. Proc. File No. 3-21881 (March 1, 2024). The proceedings center on the acquisition of shares in a large, publicly traded Truck Rental firm. At the end of December 2021 Vora Capital held about 5.6% of Truck Rental. The adviser filed a Schedule 13G in February 2022, disclosing its holdings.
From January through mid-April 2022 the adviser purchased another 2,050,000 shares of Truck Rental. This brought the adviser’s holdings to 5,050,000 or about 9.9%. By late April the adviser altered its purpose for holding the shares from passive investor to one with the intent to change or influence control of the issuer. The change of intent was not reported, however, until May 13, 2022, about one week after the Schedule was required to be amended under the then applicable 10 day period. The filing was made the same date HG Vora provided to Truck Rental a notice to acquire all of its shares at a 20% premium to market. By delaying the filing, the advisor violated Exchange Act Section 13(f)(1) and Rule 13d-1 thereunder.
To resolve the proceedings Respondent consented to the entry of a cease-and-desist order based on the Section and Rule cited. The firm also agreed to pay a penalty in the amount of $950,000.