Two men share securities regulation news

Breaking news and expert analysis on legal and compliance issues

[Back To Home][Back To Archives]

From Securities Regulation Daily, March 28, 2014

Director signed SEC filing that she knew contained a false SOX certification

By Rodney F. Tonkovic, J.D.

The SEC has sanctioned a coal company board member for signing a public filing that contained a false Sarbanes-Oxley certification. The Commission ordered Shirley Kiang to cease and desist from committing or causing violations of Exchange Act Sec. 13(a) and Rules 12b-20 and 13a-1. The Commission has also announced fraud charges against the coal company for related false disclosures (In the Matter of Shirley Kiang, March 27, 2014).

Background. The Commission has instituted administrative proceedings against L&L Energy, Inc., (L&L) and its CEO, Dickson Lee. According to the Commission, Lee sought to create the false appearance that L&L had a professional management team in place when, in reality, Lee single-handedly controlled its operations. To that end, Lee repeatedly and fraudulently misrepresented that L&L had certain persons serving as CEO and CFO when those persons served in no such roles, and Lee ran L&L's day-to-day operations.

The Commission alleges that Lee and L&L violated the antifraud provisions of the securities laws as well as rules concerning Sarbanes-Oxley certifications, disclosure controls and procedures, and obtaining and retaining electronic signatures on filings. The order seeks disgorgement and financial penalties against L&L and Lee. The order also seeks to prohibit Lee, who is a certified public accountant, from practicing before the SEC. The Commission's press release also noted that a parallel criminal indictment against Lee was unsealed yesterday in the Western District of Washington.

Kiang. Shirley Kiang was a board member and audit committee chair for L&L. From August 2008 until approximately June 2009, L&L misrepresented in four separate SEC filings that an individual served as the company's acting CFO when she did not in fact work for L&L during the relevant period. Investigating the matter, Kiang twice approached Lee, who verified that the purported acting CFO never actually served in this position, but asserted that she was making false allegations in order to get money from L&L. Lee asked Kiang not to share this information with anyone. Kiang told no one.

False certification. In August 2009, L&L filed its Form 10-K for the 2009 fiscal year. The Form 10-K included a Sarbanes-Oxley certification that any fraud involving management had been disclosed to the company’s auditors and audit committee. Kiang, as a director and audit committee chair, signed this filing, when she knew or should have known that it contained a false certification.

The Commission found that L&L violated Sec. 13(a) and Rules 12b-20 and 13a-1 by filing an annual report that included a false Sarbanes-Oxley certification and that Kiang caused L&L's violations. In addition to the cease-and-desist order, the Commission ordered Kiang to permanently refrain from signing any Commission public filing containing any certification required pursuant to the Sarbanes-Oxley Act.

The Release is No. 34-71824.

Companies: L&L Energy, Inc.

MainStory: TopStory AccountingAuditing Enforcement SarbanesOxleyAct

Securities Regulation Daily

Introducing Wolters Kluwer Securities Regulation Daily — a daily reporting service created by attorneys, for attorneys — providing same-day coverage of breaking news, court decisions, legislation, and regulatory activity.

A complete daily report of the news that affects your world

  • View full summaries of federal and state court decisions.
  • Access full text of legislative and regulatory developments.
  • Customize your daily email by topic and/or jurisdiction.
  • Search archives for stories of interest.

Not just news — the right news

  • Get expert analysis written by subject matter specialists—created by attorneys for attorneys.
  • Track law firms and organizations in the headlines with our new “Who’s in the News” feature.
  • Promote your firm with our new reprint policy.

24/7 access for a 24/7 world

  • Forward information with special copyright permissions, encouraging collaboration between counsel and colleagues.
  • Save time with mobile apps for your BlackBerry, iPhone, iPad, Android, or Kindle.
  • Access all links from any mobile device without being prompted for user name and password.