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With Benefits Come Burdens

Sep 29, 2014 | Corporate, Securities

Inspiration is a guest that does not willingly visit the lazy.
― Pyotr Ilyich Tchaikovsky

An associate once came into my office and complained about how she did not understand the choices made by a client, and that those choices were going to bring a heaping pile of hell onto the client.

When she was done, I reminded her that if our clients all made good choices, we’d be selling shoes.

A Client at Rest

A CFO at Rest

My associate countered – it was not about good choices, it was that the client was lazy. Just read the instructions and comply with the rules.

While lazy is infuriating, it’s the grist for our mill.

In the end, you won’t find an attorney who doesn’t feel that way. Every time I read yet another litigation release from the SEC it invokes just such ire. I have a modest example here:

SEC Press Release

These individuals went out and got involved in a publicly traded company. Getting involved in a publicly traded company in such a substantial way brings with it reward and responsibility. The responsibility isn’t onerous – its relatively simple disclosure. Its not as complicated as a tax return – in fact its about as complex as filling out the tax paperwork for your job.

The Securities and Exchange Commission filed charges against several officers, directors, and large shareholders for failing to file their insider paperwork. What is this, you ask? Securities laws require that officers, directors, and large shareholders of publicly traded companies report their stock positions and the change in their stock positions during the year.

The companies also need to report these positions in various filings.

The filing process for an officer, director, of 10% of greater shareholder is a relatively easy one:

• First – the filing party must get a login to EDGAR – the Securities and Exchange Commission electronic filing center on Form ID.

• Once you receive the login, you file an initial statement of beneficial ownership on Form 3.
• You file changes in the ownership on Form 4. .

• You update the information annually on Form 5.

• An investor that acquires beneficial ownership of more than 5% (but less than 10%) of a voting class of a company’s equity securities must file a Schedule 13D with the SEC.

• Depending upon the facts and circumstances, the person or group of persons may be eligible to file the more abbreviated Schedule 13G in lieu of Schedule 13D.

The parties mentioned in the Securities and Exchange Commission litigation release also sold without reporting.

Remember – the securities laws exist to maintain a good and orderly marketplace, protect shareholders, and make the system more fair. It is relatively simple to keep on the right side of the law and avoid this simple trap for the unwary.


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I formerly worked as a satellite employee from my home state of New Jersey. I ended my employment with my former employer in 2016. In 2018, I was sued by my former employer for $1.1 million in Illinois State Court. I was referred to Brinen & Associates, LLC by a friend who is a client of the firm. Brinen & Associates, LLC came highly recommended. I contacted Joshua Brinen and then had a consultation at his office with his colleague Mark White. Together, Messrs. Brinen and White explained my options...

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