In re Kenneth E. Shipley

 UNITED STATES OF AMERICA 
 Before the 
   SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101171 / September 25, 2024 
                                                               
ADMINISTRATIVE PROCEEDING 
File No. 3-22187 
 
 
 
In the Matter of 
 
Kenneth E. Shipley, 
 
Respondent. 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 21C OF THE SECURITIES 
EXCHANGE ACT OF 1934, MAKING 
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER 
  
 
 I. 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that 
cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 
Securities Exchange Act of 1934 (“Exchange Act”), against Kenneth E. Shipley (“Shipley” or 
“Respondent”).   
II. 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 
purpose of these proceedings and any other proceedings brought by or on behalf of the 
Commission, or to which the Commission is a party, and without admitting or denying the 
findings herein, except as to the Commission’s jurisdiction over Respondent and the subject 
matter of these proceedings, which are admitted, and except as provided herein in Section V, 
Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 
Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 
a Cease-and-Desist Order (“Order”), as set forth below.   

 
 
 2 
 
III. 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
Summary 
1. These proceedings arise out of violations of the beneficial ownership reporting 
requirements of the federal securities laws.   
2. Section 16(a) of the Exchange Act and the rules promulgated thereunder require 
officers and directors of a company with a registered class of equity security, and any beneficial 
owners of greater than 10% of such class, to file certain reports of securities holdings and 
transactions.  Section 16(a) was motivated by a belief that “the most potent weapon against the 
abuse of inside information is full and prompt publicity” and by a desire “to give investors an idea 
of the purchases and sales by insiders which may in turn indicate their private opinion as to 
prospects of the company.”  H.R. Rep. 73-1383, at 13, 24 (1934).  Reflecting this informational 
purpose, the obligation to file applies irrespective of profits or the filer’s reasons for engaging in the 
transactions.  The Sarbanes-Oxley Act of 2002 and Commission implementing regulations 
accelerated the reporting deadline for most transactions to two business days and mandated that all 
reports be filed electronically on EDGAR to facilitate rapid dissemination to the public. 
3. Section 13(g) of the Exchange Act and the rules promulgated thereunder require any 
person who is directly or indirectly the beneficial owner of more than 5% of a class of registered 
equity security as of a specified time, and who has not made an acquisition subject to Section 13(d) 
of the Exchange Act, to file a statement with the Commission disclosing certain information and to 
file certain updating amendments.  The duty to file is not dependent on any intention by the 
stockholder, but on a mechanical 5% ownership test.  
4. While subject to the reporting requirements of Section 16(a) of the Exchange Act as 
an officer and director of Legacy Housing Corporation (“Legacy”) and as a greater than 10% 
beneficial owner of Legacy’s registered class of common stock, Respondent violated Section 16(a) 
on multiple occasions by failing to timely file reports of transactions in Legacy’s securities.  
Respondent also violated Section 13(g) by failing file as required on Schedule 13G with respect to 
his beneficial ownership in Legacy.    
Respondent 
5. Shipley, age 65, is a resident of Levelland, Texas.  He has been an executive officer 
and director of Legacy, and been a greater than 10% beneficial owner of Legacy’s common stock 
since it was registered with the Commission under Section 12 in December 2018 in connection with 
its initial public offering (“IPO”).  In addition to serving as a director of Legacy, Respondent was 
President and CEO of Legacy Housing Corporation (“Legacy”) through June 7, 2022, and has 
                                                 
1
  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on 
any other person or entity in this or any other proceeding. 

 
 
 3 
 
served as Executive Vice President since June 7, 2022.  At all relevant times, Respondent is and has 
been subject to Sections 13(g) and 16(a) of the Exchange Act.    
Issuer 
6. Legacy is a Texas corporation with its principal place of business in Texas.  
Legacy’s common stock is and has been registered with the Commission under Section 12 of the 
Exchange Act since December 13, 2018 and trades on the NASDAQ (ticker: LEGH). 
 
Applicable Legal Framework 
7. Section 16(a) of the Exchange Act and the rules promulgated thereunder apply to 
every person who is the beneficial owner of more than 10% of any class of any equity security 
registered pursuant to Section 12 of the Exchange Act, and any officer or director of the issuer of 
any such security (collectively, “insiders”).   
8. Pursuant to Section 16(a) and Rule 16a-3, insiders are required to file initial 
statements of holdings on Form 3 and keep this information current by reporting transactions on 
Forms 4 and 5.  Specifically, within 10 days after becoming an insider, or on or before the effective 
date of the Section 12 registration of the class of equity security, an insider must file a Form 3 report 
disclosing all securities of the issuer in which the insider has or is deemed to have a direct or 
indirect pecuniary interest.  To keep this information current, insiders must file Form 4 reports 
disclosing transactions resulting in a change in beneficial ownership within two business days 
following the execution date of the transaction, except for limited types of transactions eligible for 
deferred reporting.  Transactions required to be reported on Form 4 include purchases and sales of 
securities, exercises and conversions of derivative securities, and grants or awards of securities from 
the issuer.  In addition, insiders are required to file a Form 5 report within 45 days after the issuer’s 
fiscal year-end to report any transactions or holdings that should have been, but were not, reported 
on Form 3 or 4 (as applicable) during the issuer’s most recent fiscal year and any transactions 
eligible for deferred reporting (unless the insider has previously reported all such transactions).   
9. Exchange Act Rule 16a-1(f) defines the term “officer” to include an issuer’s 
president, principal financial officer, principal accounting officer (or, if there is no such 
accounting officer, the controller), any vice-president of the issuer in charge of a principal 
business unit, division or function, and any other officer who performs a policy-making function, 
or any other person who performs similar policy-making functions for the issuer.   
10. Although the Commission has encouraged the practice of many issuers to “help their 
[officers and directors] or submit the [] filings on their behalf . . . [in order] to facilitate accurate and 

 
 
 4 
 
timely filing,” Section 16 places the responsibility to report changes in securities ownership on 
insiders.
2
   
11. During the time period herein, under Section 13(g) of the Exchange Act and the 
operation of Rule 13d-1(d), any person, including a group, who, as of the end of a calendar year, 
was directly or indirectly the beneficial owner of more than 5% of any class of equity security 
registered under Section 12 of the Exchange Act, and who had not made an acquisition subject to 
Section 13(d), was required publicly file with the Commission a disclosure statement containing 
the information specified by Schedule 13G within 45 days after the end of the calendar year in 
which the obligation arises.
3
  During the time period herein, Exchange Act Rule 13d-2(b) 
required that a person filing a Schedule 13G pursuant to Rule 13d-1(d) file an annual amendment 
within 45 days after the end of each calendar year if there were any changes in the information 
reported in the previous filing on that Schedule, unless certain limited exceptions applied.
4
 
12. There is no state of mind requirement for violations of Section 16(a) and 13(g) 
and the rules thereunder.
5
  The failure to timely file a required report, even if inadvertent, 
constitutes a violation.
6
     
                                                 
2
   Mandated Electronic Filing and Website Posting for Forms 3, 4 and 5, SEC Release No. 34-47809 (May 7, 
2003), 68 Fed. Reg. 25788, 25789 (May 13, 2003). 
 
3
  On October 10, 2023, the Commission adopted amendments to the rules governing beneficial ownership 
reporting under Sections 13(d) and 13(g) to update and shorten certain filing deadlines (the “2023 Amendments”).  
Modernization of Beneficial Ownership Reporting, SEC Release No. 34-98704 (Oct. 10, 2023), 88 Fed. Reg. 76896 
(Nov. 7, 2023).  Among other provisions, the 2023 Amendments replaced the requirement in Rule 13d-1(d) to 
require that such a greater than 5% beneficial owner as of the end of any calendar quarter to file an initial statement 
on Schedule 13G within 45 days of the end of the quarter in which the obligation arises.  Id. at 76897, 76917.  
Compliance with this new requirement is required beginning September 30, 2024.  See id. at 76942.  
 
4
  The 2023 Amendments replaced this requirement with a requirement to file an amendment within 45 days 
after the end of a calendar quarter in which a material change occurs to the information previously set forth.  See id. 
at 76898, 76921.  Compliance with this new requirement is required beginning September 30, 2024.  See id. at 
76942. 
 
5
   See, e.g., SEC v. e-Smart Technologies, Inc., 82 F. Supp. 3d 97, 104 (D.D.C. 2015) (scienter is not required 
to establish a violation of Section 16(a) of the Exchange Act); cf. SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1167 
(D.C. Cir. 1978) (“Indeed, the plain language of section 13(d)(1) gives no hint that intentional conduct need be 
found, but rather, appears to place a simple and affirmative duty of reporting on certain persons.  The legislative 
history confirms that Congress was concerned with providing disclosure to investors, and not merely with protecting 
them from fraudulent conduct”).     
 
6
   Cf. Oppenheimer & Co., Inc., 47 SEC 286, 1980 WL 26901, at *2 (May 19, 1980) (Commission opinion) 
(“We have previously held that the failure to make a required report, even though inadvertent, constitutes a willful 
violation”); Herbert Moskowitz, 77 SEC Docket 446, 2002 WL 434524, at *7 (Mar. 21, 2002) (Commission opinion) 
(“evidence of both motive for non-disclosure and actual market impact ... is irrelevant” to whether violations of Section 
13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder occurred); see generally SEC Release No. 34-47809, 
68 Fed. Reg. at 25792 (noting that an issuer’s eligibility for temporary relief from disclosing Forms 4 filed one business 
 

 
 
 5 
 
Respondent Failed to File Required Section 16(a) Reports on a Timely Basis 
13. Since Legacy’s common stock became registered with the Commission on 
December 13, 2018, Respondent has been subject to the reporting requirements of Exchange Act 
Section 16(a) as an officer, director, and greater than 10% beneficial owner, and remains subject 
to those requirements in each of those capacities.  Respondent timely filed an initial statement of 
beneficial ownership on Form 3 on December 13, 2018. 
14. Subsequently, Respondent failed to file on a timely basis multiple required Section 
16(a) reports with the Commission, including to report transactions executed on the following dates 
that were required to be reported on Form 4 within two business days:   
Form Type Date of Trans. Due Date Date Filed 
4 7/16/2019 7/18/2019 8/16/2019 
4 7/25/2019 7/29/2019 8/16/2019 
4 8/8/2019 8/12/2019 8/16/2019 
4 8/9/2019 8/13/2019 8/16/2019 
4 10/22/2019 10/24/2019 10/28/2019 
4 8/13/2020 8/17/2020 9/14/2020 
4 8/14/2020 8/18/2020 9/14/2020 
4 8/17/2020 8/19/2020 9/14/2020 
4 8/18/2020 8/20/2020 9/14/2020 
4 8/19/2020 8/21/2020 9/14/2020 
4 8/20/2020 8/24/2020 9/14/2020 
4 8/25/2020 8/27/2020 9/14/2020 
4 8/28/2020 9/1/2020 9/17/2020 
4 8/31/2020 9/2/2020 9/17/2020 
4 9/1/2020 9/3/2020 9/17/2020 
4 9/2/2020 9/4/2020 9/17/2020 
4 9/3/2020 9/8/2020 9/17/2020 
4 9/4/2020 9/8/2020 9/17/2020 
4 9/8/2020 9/10/2020 9/17/2020 
                                                 
day late by its insiders “does not change the fact that any Form 3, 4 or 5 filed later than the applicable due date violates 
Section 16(a)”) (emphasis added). 

 
 
 6 
 
Form Type Date of Trans. Due Date Date Filed 
4 9/9/2020 9/11/2020 9/17/2020 
4 9/10/2020 9/14/2020 9/17/2020 
4 10/9/2020 10/14/2020 10/16/2020 
4 10/12/2020 10/14/2020 10/16/2020 
4 12/21/2020 12/23/2020 1/11/2021 
4 10/4/2021 10/6/2021 10/8/2021 
 
15. Respondent’s late-reported transactions all involved open-market sales of Legacy 
common stock, with aggregate proceeds of $1.8 million.  Approximately half of Respondent’s 
transactions between July 2019 and October 2021 were reported one or more days late. 
16. As a result of the conduct described above, Respondent violated Section 16(a) of 
the Exchange Act and Rule 16a-3 thereunder.  
Respondent Failed to Timely File on Schedule 13G 
17. Respondent has been subject to the reporting requirements of Exchange Act 
Section 13(g) since December 31, 2018 as a beneficial owner of more than 5% of Legacy’s 
registered class of common stock, and remains subject to those requirements.   
18. Pursuant to Section 13(g) and the operation of Rules 13d-1(d) and 13d-2(b), 
Respondent was required to file an initial Schedule 13G statement by February 14, 2019, and to 
thereafter file annual amendments to such statement within 45 days after the end of each 
calendar year if there were any changes in the information reported in the previous filing on that 
Schedule.  
19. Respondent failed to make any filings on Schedule 13G until July 21, 2022—after 
the Commission’s enforcement staff contacted him regarding his failure to file.  On July 21, 
2022, Respondent filed an initial Schedule 13G statement to report his beneficial ownership as of 
December 31, 2018, as well as filed three amendments to the Schedule 13G to report his 
beneficial ownership as of December 31, 2019, December 31, 2020, and December 31, 2021. 
20. As a result of the conduct described above, Respondent violated Section 13(g) of 
the Exchange Act and Rule 13d-1 thereunder. 
Respondent’s Remedial Efforts 
21. Respondent has represented that his delinquent filings resulted from the failure of 
senior Legacy personnel to make timely filings on his behalf.  Respondent’s reliance on Legacy 
does not excuse his violations because an insider retains legal responsibility for compliance with 

 
 
 7 
 
the filing requirements, including the obligation to assure that the filing is timely and accurately 
made.
7
  In addition, here, Respondent took inadequate and ineffective steps to monitor whether 
timely and accurate filings were made on his behalf by Legacy.  
22. In determining to accept Respondent’s Offer, the Commission considered certain 
remedial acts undertaken by Respondent, circumstances relating to Respondent’s representations 
as to reliance, and cooperation afforded to Commission staff. 
IV. 
In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer. 
 Accordingly, it is hereby ORDERED that: 
 A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 
committing or causing any violations and any future violations of Sections 13(g) and 16(a) of the 
Exchange Act and Rules 13d-1 and 16a-3 promulgated thereunder.   
B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 
penalty in the amount of $30,000 to the Securities and Exchange Commission, for transfer to the 
general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 
payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment 
must be made in one of the following ways:   
(1)  Respondent may transmit payment electronically to the Commission, which will 
provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2)  Respondent may make direct payment from a bank account via Pay.gov through 
the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3)  Respondent may pay by certified check, bank cashier’s check, or United States 
postal money order, made payable to the Securities and Exchange Commission and hand-
delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
                                                 
7
   See SEC Release No. 34-47809, 68 Fed. Reg. at 25789 (“[A]n insider is legally responsible for filing 
regardless of who submits a filing on the insider’s behalf.”); Ownership Reports and Trading by Officers, Directors 
and Principal Security Holders, SEC Release 34-37260 (May 31, 1996), 61 Fed. Reg. 30376, 30386 (June 14, 1996) 
(“Each beneficial owner [making a joint or group filing] will retain individual liability for compliance with the filing 
requirements, including the obligation to assure that the filing is timely and accurately made.”); see also Bettina 
Bancroft, 53 SEC Docket 1955, 1993 WL 81744, at *3 (Mar. 23, 1993) (settled order) (“Although the Commission 
encourages individuals to obtain professional assistance in meeting their filing obligations, Section 16 of the Exchange 
Act places the responsibility to report changes in securities ownership on insiders.”).    

 
 
 8 
 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying 
Kenneth E. Shipley as a Respondent in these proceedings, and the file number of these 
proceedings; a copy of the cover letter and check or money order must be sent to Thomas Smith, 
Associate Regional Director, Division of Enforcement, Securities and Exchange Commission, 
100 Pearl Street, Suite 20-100, New York, NY 10004.   
C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 
be treated as penalties paid to the government for all purposes, including all tax purposes.  To 
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 
Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 
award of compensatory damages by the amount of any part of Respondent’s payment of a civil 
penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 
a Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order 
granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 
the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 
deemed an additional civil penalty and shall not be deemed to change the amount of the civil 
penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 
means a private damages action brought against Respondent by or on behalf of one or more 
investors based on substantially the same facts as alleged in the Order instituted by the 
Commission in this proceeding. 
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in 
Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and 
admitted by Respondent, and further, any debt for disgorgement, prejudgment interest, civil 
penalty or other amounts due by Respondent under this Order or any other judgment, order, 
consent order, decree or settlement agreement entered in connection with this proceeding, is a 
debt for the violation by Respondent of the federal securities laws or any regulation or order 
issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. 
§ 523(a)(19). 
 By the Commission. 
 
 
       Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

   SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 101171 / September 25, 2024 

                                                               

ADMINISTRATIVE PROCEEDING 

File No. 3-22187 

 

 

 

In the Matter of 

 

Kenneth E. Shipley, 

 

Respondent. 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 21C OF THE SECURITIES 

EXCHANGE ACT OF 1934, MAKING 

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER 

  

 

 I. 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that 

cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the 

Securities Exchange Act of 1934 (“Exchange Act”), against Kenneth E. Shipley (“Shipley” or 

“Respondent”).   

II. 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept.  Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 

findings herein, except as to the Commission’s jurisdiction over Respondent and the subject 

matter of these proceedings, which are admitted, and except as provided herein in Section V, 

Respondent consents to the entry of this Order Instituting Cease-and-Desist Proceedings 

Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing 

a Cease-and-Desist Order (“Order”), as set forth below.   



 
 

 2 

 

III. 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

Summary 

1. These proceedings arise out of violations of the beneficial ownership reporting 

requirements of the federal securities laws.   

2. Section 16(a) of the Exchange Act and the rules promulgated thereunder require 

officers and directors of a company with a registered class of equity security, and any beneficial 

owners of greater than 10% of such class, to file certain reports of securities holdings and 

transactions.  Section 16(a) was motivated by a belief that “the most potent weapon against the 

abuse of inside information is full and prompt publicity” and by a desire “to give investors an idea 

of the purchases and sales by insiders which may in turn indicate their private opinion as to 

prospects of the company.”  H.R. Rep. 73-1383, at 13, 24 (1934).  Reflecting this informational 

purpose, the obligation to file applies irrespective of profits or the filer’s reasons for engaging in the 

transactions.  The Sarbanes-Oxley Act of 2002 and Commission implementing regulations 

accelerated the reporting deadline for most transactions to two business days and mandated that all 

reports be filed electronically on EDGAR to facilitate rapid dissemination to the public. 

3. Section 13(g) of the Exchange Act and the rules promulgated thereunder require any 

person who is directly or indirectly the beneficial owner of more than 5% of a class of registered 

equity security as of a specified time, and who has not made an acquisition subject to Section 13(d) 

of the Exchange Act, to file a statement with the Commission disclosing certain information and to 

file certain updating amendments.  The duty to file is not dependent on any intention by the 

stockholder, but on a mechanical 5% ownership test.  

4. While subject to the reporting requirements of Section 16(a) of the Exchange Act as 

an officer and director of Legacy Housing Corporation (“Legacy”) and as a greater than 10% 

beneficial owner of Legacy’s registered class of common stock, Respondent violated Section 16(a) 

on multiple occasions by failing to timely file reports of transactions in Legacy’s securities.  

Respondent also violated Section 13(g) by failing file as required on Schedule 13G with respect to 

his beneficial ownership in Legacy.    

Respondent 

5. Shipley, age 65, is a resident of Levelland, Texas.  He has been an executive officer 

and director of Legacy, and been a greater than 10% beneficial owner of Legacy’s common stock 

since it was registered with the Commission under Section 12 in December 2018 in connection with 

its initial public offering (“IPO”).  In addition to serving as a director of Legacy, Respondent was 

President and CEO of Legacy Housing Corporation (“Legacy”) through June 7, 2022, and has 

                                                 
1  The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on 

any other person or entity in this or any other proceeding. 



 
 

 3 

 

served as Executive Vice President since June 7, 2022.  At all relevant times, Respondent is and has 

been subject to Sections 13(g) and 16(a) of the Exchange Act.    

Issuer 

6. Legacy is a Texas corporation with its principal place of business in Texas.  

Legacy’s common stock is and has been registered with the Commission under Section 12 of the 

Exchange Act since December 13, 2018 and trades on the NASDAQ (ticker: LEGH). 

 

Applicable Legal Framework 

7. Section 16(a) of the Exchange Act and the rules promulgated thereunder apply to 

every person who is the beneficial owner of more than 10% of any class of any equity security 

registered pursuant to Section 12 of the Exchange Act, and any officer or director of the issuer of 

any such security (collectively, “insiders”).   

8. Pursuant to Section 16(a) and Rule 16a-3, insiders are required to file initial 

statements of holdings on Form 3 and keep this information current by reporting transactions on 

Forms 4 and 5.  Specifically, within 10 days after becoming an insider, or on or before the effective 

date of the Section 12 registration of the class of equity security, an insider must file a Form 3 report 

disclosing all securities of the issuer in which the insider has or is deemed to have a direct or 

indirect pecuniary interest.  To keep this information current, insiders must file Form 4 reports 

disclosing transactions resulting in a change in beneficial ownership within two business days 

following the execution date of the transaction, except for limited types of transactions eligible for 

deferred reporting.  Transactions required to be reported on Form 4 include purchases and sales of 

securities, exercises and conversions of derivative securities, and grants or awards of securities from 

the issuer.  In addition, insiders are required to file a Form 5 report within 45 days after the issuer’s 

fiscal year-end to report any transactions or holdings that should have been, but were not, reported 

on Form 3 or 4 (as applicable) during the issuer’s most recent fiscal year and any transactions 

eligible for deferred reporting (unless the insider has previously reported all such transactions).   

9. Exchange Act Rule 16a-1(f) defines the term “officer” to include an issuer’s 

president, principal financial officer, principal accounting officer (or, if there is no such 

accounting officer, the controller), any vice-president of the issuer in charge of a principal 

business unit, division or function, and any other officer who performs a policy-making function, 

or any other person who performs similar policy-making functions for the issuer.   

10. Although the Commission has encouraged the practice of many issuers to “help their 

[officers and directors] or submit the [] filings on their behalf . . . [in order] to facilitate accurate and 



 
 

 4 

 

timely filing,” Section 16 places the responsibility to report changes in securities ownership on 

insiders.2   

11. During the time period herein, under Section 13(g) of the Exchange Act and the 

operation of Rule 13d-1(d), any person, including a group, who, as of the end of a calendar year, 

was directly or indirectly the beneficial owner of more than 5% of any class of equity security 

registered under Section 12 of the Exchange Act, and who had not made an acquisition subject to 

Section 13(d), was required publicly file with the Commission a disclosure statement containing 

the information specified by Schedule 13G within 45 days after the end of the calendar year in 

which the obligation arises.3  During the time period herein, Exchange Act Rule 13d-2(b) 

required that a person filing a Schedule 13G pursuant to Rule 13d-1(d) file an annual amendment 

within 45 days after the end of each calendar year if there were any changes in the information 

reported in the previous filing on that Schedule, unless certain limited exceptions applied.4 

12. There is no state of mind requirement for violations of Section 16(a) and 13(g) 

and the rules thereunder.5  The failure to timely file a required report, even if inadvertent, 

constitutes a violation.6     

                                                 
2   Mandated Electronic Filing and Website Posting for Forms 3, 4 and 5, SEC Release No. 34-47809 (May 7, 

2003), 68 Fed. Reg. 25788, 25789 (May 13, 2003). 

 
3  On October 10, 2023, the Commission adopted amendments to the rules governing beneficial ownership 

reporting under Sections 13(d) and 13(g) to update and shorten certain filing deadlines (the “2023 Amendments”).  

Modernization of Beneficial Ownership Reporting, SEC Release No. 34-98704 (Oct. 10, 2023), 88 Fed. Reg. 76896 

(Nov. 7, 2023).  Among other provisions, the 2023 Amendments replaced the requirement in Rule 13d-1(d) to 

require that such a greater than 5% beneficial owner as of the end of any calendar quarter to file an initial statement 

on Schedule 13G within 45 days of the end of the quarter in which the obligation arises.  Id. at 76897, 76917.  

Compliance with this new requirement is required beginning September 30, 2024.  See id. at 76942.  

 
4  The 2023 Amendments replaced this requirement with a requirement to file an amendment within 45 days 

after the end of a calendar quarter in which a material change occurs to the information previously set forth.  See id. 

at 76898, 76921.  Compliance with this new requirement is required beginning September 30, 2024.  See id. at 

76942. 

 
5   See, e.g., SEC v. e-Smart Technologies, Inc., 82 F. Supp. 3d 97, 104 (D.D.C. 2015) (scienter is not required 

to establish a violation of Section 16(a) of the Exchange Act); cf. SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1167 

(D.C. Cir. 1978) (“Indeed, the plain language of section 13(d)(1) gives no hint that intentional conduct need be 

found, but rather, appears to place a simple and affirmative duty of reporting on certain persons.  The legislative 

history confirms that Congress was concerned with providing disclosure to investors, and not merely with protecting 

them from fraudulent conduct”).     

 
6   Cf. Oppenheimer & Co., Inc., 47 SEC 286, 1980 WL 26901, at *2 (May 19, 1980) (Commission opinion) 

(“We have previously held that the failure to make a required report, even though inadvertent, constitutes a willful 

violation”); Herbert Moskowitz, 77 SEC Docket 446, 2002 WL 434524, at *7 (Mar. 21, 2002) (Commission opinion) 

(“evidence of both motive for non-disclosure and actual market impact … is irrelevant” to whether violations of Section 

13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder occurred); see generally SEC Release No. 34-47809, 

68 Fed. Reg. at 25792 (noting that an issuer’s eligibility for temporary relief from disclosing Forms 4 filed one business 

 



 
 

 5 

 

Respondent Failed to File Required Section 16(a) Reports on a Timely Basis 

13. Since Legacy’s common stock became registered with the Commission on 

December 13, 2018, Respondent has been subject to the reporting requirements of Exchange Act 

Section 16(a) as an officer, director, and greater than 10% beneficial owner, and remains subject 

to those requirements in each of those capacities.  Respondent timely filed an initial statement of 

beneficial ownership on Form 3 on December 13, 2018. 

14. Subsequently, Respondent failed to file on a timely basis multiple required Section 

16(a) reports with the Commission, including to report transactions executed on the following dates 

that were required to be reported on Form 4 within two business days:   

Form Type Date of Trans. Due Date Date Filed 

4 7/16/2019 7/18/2019 8/16/2019 

4 7/25/2019 7/29/2019 8/16/2019 

4 8/8/2019 8/12/2019 8/16/2019 

4 8/9/2019 8/13/2019 8/16/2019 

4 10/22/2019 10/24/2019 10/28/2019 

4 8/13/2020 8/17/2020 9/14/2020 

4 8/14/2020 8/18/2020 9/14/2020 

4 8/17/2020 8/19/2020 9/14/2020 

4 8/18/2020 8/20/2020 9/14/2020 

4 8/19/2020 8/21/2020 9/14/2020 

4 8/20/2020 8/24/2020 9/14/2020 

4 8/25/2020 8/27/2020 9/14/2020 

4 8/28/2020 9/1/2020 9/17/2020 

4 8/31/2020 9/2/2020 9/17/2020 

4 9/1/2020 9/3/2020 9/17/2020 

4 9/2/2020 9/4/2020 9/17/2020 

4 9/3/2020 9/8/2020 9/17/2020 

4 9/4/2020 9/8/2020 9/17/2020 

4 9/8/2020 9/10/2020 9/17/2020 

                                                 
day late by its insiders “does not change the fact that any Form 3, 4 or 5 filed later than the applicable due date violates 

Section 16(a)”) (emphasis added). 



 
 

 6 

 

Form Type Date of Trans. Due Date Date Filed 

4 9/9/2020 9/11/2020 9/17/2020 

4 9/10/2020 9/14/2020 9/17/2020 

4 10/9/2020 10/14/2020 10/16/2020 

4 10/12/2020 10/14/2020 10/16/2020 

4 12/21/2020 12/23/2020 1/11/2021 

4 10/4/2021 10/6/2021 10/8/2021 

 

15. Respondent’s late-reported transactions all involved open-market sales of Legacy 

common stock, with aggregate proceeds of $1.8 million.  Approximately half of Respondent’s 

transactions between July 2019 and October 2021 were reported one or more days late. 

16. As a result of the conduct described above, Respondent violated Section 16(a) of 

the Exchange Act and Rule 16a-3 thereunder.  

Respondent Failed to Timely File on Schedule 13G 

17. Respondent has been subject to the reporting requirements of Exchange Act 

Section 13(g) since December 31, 2018 as a beneficial owner of more than 5% of Legacy’s 

registered class of common stock, and remains subject to those requirements.   

18. Pursuant to Section 13(g) and the operation of Rules 13d-1(d) and 13d-2(b), 

Respondent was required to file an initial Schedule 13G statement by February 14, 2019, and to 

thereafter file annual amendments to such statement within 45 days after the end of each 

calendar year if there were any changes in the information reported in the previous filing on that 

Schedule.  

19. Respondent failed to make any filings on Schedule 13G until July 21, 2022—after 

the Commission’s enforcement staff contacted him regarding his failure to file.  On July 21, 

2022, Respondent filed an initial Schedule 13G statement to report his beneficial ownership as of 

December 31, 2018, as well as filed three amendments to the Schedule 13G to report his 

beneficial ownership as of December 31, 2019, December 31, 2020, and December 31, 2021. 

20. As a result of the conduct described above, Respondent violated Section 13(g) of 

the Exchange Act and Rule 13d-1 thereunder. 

Respondent’s Remedial Efforts 

21. Respondent has represented that his delinquent filings resulted from the failure of 

senior Legacy personnel to make timely filings on his behalf.  Respondent’s reliance on Legacy 

does not excuse his violations because an insider retains legal responsibility for compliance with 



 
 

 7 

 

the filing requirements, including the obligation to assure that the filing is timely and accurately 

made.7  In addition, here, Respondent took inadequate and ineffective steps to monitor whether 

timely and accurate filings were made on his behalf by Legacy.  

22. In determining to accept Respondent’s Offer, the Commission considered certain 

remedial acts undertaken by Respondent, circumstances relating to Respondent’s representations 

as to reliance, and cooperation afforded to Commission staff. 

IV. 

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer. 

 Accordingly, it is hereby ORDERED that: 

 A. Pursuant to Section 21C of the Exchange Act, Respondent cease and desist from 

committing or causing any violations and any future violations of Sections 13(g) and 16(a) of the 

Exchange Act and Rules 13d-1 and 16a-3 promulgated thereunder.   

B. Respondent shall, within 14 days of the entry of this Order, pay a civil money 

penalty in the amount of $30,000 to the Securities and Exchange Commission, for transfer to the 

general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3).  If timely 

payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717.  Payment 

must be made in one of the following ways:   

(1)  Respondent may transmit payment electronically to the Commission, which will 

provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2)  Respondent may make direct payment from a bank account via Pay.gov through 

the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3)  Respondent may pay by certified check, bank cashier’s check, or United States 

postal money order, made payable to the Securities and Exchange Commission and hand-

delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

                                                 
7   See SEC Release No. 34-47809, 68 Fed. Reg. at 25789 (“[A]n insider is legally responsible for filing 

regardless of who submits a filing on the insider’s behalf.”); Ownership Reports and Trading by Officers, Directors 

and Principal Security Holders, SEC Release 34-37260 (May 31, 1996), 61 Fed. Reg. 30376, 30386 (June 14, 1996) 

(“Each beneficial owner [making a joint or group filing] will retain individual liability for compliance with the filing 

requirements, including the obligation to assure that the filing is timely and accurately made.”); see also Bettina 

Bancroft, 53 SEC Docket 1955, 1993 WL 81744, at *3 (Mar. 23, 1993) (settled order) (“Although the Commission 

encourages individuals to obtain professional assistance in meeting their filing obligations, Section 16 of the Exchange 

Act places the responsibility to report changes in securities ownership on insiders.”).    



 
 

 8 

 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying 

Kenneth E. Shipley as a Respondent in these proceedings, and the file number of these 

proceedings; a copy of the cover letter and check or money order must be sent to Thomas Smith, 

Associate Regional Director, Division of Enforcement, Securities and Exchange Commission, 

100 Pearl Street, Suite 20-100, New York, NY 10004.   

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall 

be treated as penalties paid to the government for all purposes, including all tax purposes.  To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, he shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”).  If the court in any Related Investor Action grants such 

a Penalty Offset, Respondent agrees that he shall, within 30 days after entry of a final order 

granting the Penalty Offset, notify the Commission's counsel in this action and pay the amount of 

the Penalty Offset to the Securities and Exchange Commission.  Such a payment shall not be 

deemed an additional civil penalty and shall not be deemed to change the amount of the civil 

penalty imposed in this proceeding.  For purposes of this paragraph, a “Related Investor Action” 

means a private damages action brought against Respondent by or on behalf of one or more 

investors based on substantially the same facts as alleged in the Order instituted by the 

Commission in this proceeding. 

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in 

Section 523 of the Bankruptcy Code, 11 U.S.C. § 523, the findings in this Order are true and 

admitted by Respondent, and further, any debt for disgorgement, prejudgment interest, civil 

penalty or other amounts due by Respondent under this Order or any other judgment, order, 

consent order, decree or settlement agreement entered in connection with this proceeding, is a 

debt for the violation by Respondent of the federal securities laws or any regulation or order 

issued under such laws, as set forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. 

§ 523(a)(19). 

 By the Commission. 

 

 

       Vanessa A. Countryman 

       Secretary 


	Respondent