In re Legacy Housing

   
 
 
 
 
 UNITED STATES OF AMERICA 
 Before the 
   SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No. 101172 / September 25, 2024 
                                                               
ADMINISTRATIVE PROCEEDING 
File No. 3-22188 
 
 
 
In the Matter of 
 
Legacy Housing 
Corporation, 
 
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 Legacy Housing Corporation 
(“Legacy” 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, 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 issuer reporting requirements and 
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 class of equity security registered under Section 12 of the 
Exchange Act, and any beneficial owners of greater than 10% of such class (collectively, 
“insiders”), 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. Reporting issuers are required to disclose in the proxy statement for the issuer’s 
annual meeting, or its annual report, Section 16 reporting delinquencies by its insiders.  Although 
insiders remain responsible for the timeliness and accuracy of their required Section 16(a) reports, 
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 timely filing.”  
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). 
4. Since 2018, Respondent has been a reporting issuer and its insiders have been 
required to file Section 16(a) reports.  On numerous occasions, Respondent’s insiders violated 
Section 16(a) by failing to timely file required reports.  Respondent failed to comply with its 
disclosure obligations to report such delinquencies.  In addition, Respondent was a cause of 
many of the Section 16(a) violations by its insiders as a result of Respondent’s negligence in 
performing certain tasks it voluntarily agreed to undertake in connection with the preparation and 
filing of Section 16(a) reports on their behalf.  
Respondent 
5. Legacy is a Texas corporation with its principal place of business in Texas.  
Legacy’s common stock is and has been at all relevant times registered with the Commission under 
                                                 
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 
 
Section 12 of the Exchange Act and trades on the NASDAQ (ticker: LEGH).  Legacy is required to 
file annual reports on Form 10-K pursuant to Section 13(a) of the Exchange Act and Rule 13a-1 
thereunder. 
Applicable Legal Framework 
6. 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 his or her beneficial ownership of all securities of the issuer.  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 during the issuer’s most recent fiscal year 
and any transactions eligible for deferred reporting (unless the corporate insider has previously 
reported all such transactions).  Insiders are required to file the reports electronically on EDGAR.  
There is no state of mind requirement for violations of Section 16(a) and the rules thereunder.
2
    
7. Section 13(a) of the Exchange Act requires issuers that have securities registered 
pursuant to Section 12 of the Exchange Act to file such periodic and other reports as the 
Commission may prescribe and in conformity with such rules as the Commission may promulgate.   
Exchange Act Rule 13a-1 requires such issuers to file annual reports with the Commission 
containing specified information.  In 1991, the Commission adopted Item 405 of Regulation S-K to 
help address compliance with Section 16(a) by requiring reporting issuers to disclose in annual 
proxy and information statements or annual reports information regarding delinquent Section 
16(a) filings by insiders.
3
   
                                                 
2
   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. 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”); 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 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).  Negligence is sufficient to establish liability for causing such violations.  See KPMG 
Peat Marwick LLP, 74 SEC Docket 357, 2001 WL 47245, at *19 (Jan. 19, 2001) (Commission opinion) 
(“[N]egligence is sufficient to establish ‘causing’ liability under Exchange Act Section 21C(a) ... in cases in which a 
person is alleged to ‘cause’ a primary violation that does not require scienter.”). 
3
   Ownership Reports and Trading by Officers, Directors and Principal Security Holders, SEC Release 34-
28869, 56 Fed. Reg. 7242, 7259-60 (Feb. 21, 1991); 17 C.F.R. § 229.405.  The Commission amended Item 405 in 
FAST Act Modernization and Simplification of Regulation S-K, SEC Release 33-10618 (Mar. 20, 2019), 84 Fed. 
 

 
4 
 
8. Item 405 of Regulation S-K specifically requires an issuer to disclose any late 
filing or known failure by an insider to file a report required by Section 16(a).  In determining 
whether such disclosure is required, the issuer may rely on a review of the Forms 3 and 4 filed 
during the most recent fiscal year, and Forms 5 filed with respect to the most recent fiscal year, 
by the issuer’s insiders.  Section 16(a) reports are posted on EDGAR, and thus are readily 
available to issuers to evaluate their timeliness.  A “known” failure to file includes, but is not 
limited to, a failure to file a Form 3, which is required of all insiders, and a failure to file a Form 
5 in the absence of a written representation that no Form 5 is required, unless the issuer 
otherwise knows that no Form 5 is required.  The Item 405 disclosure of any late filings or 
known failures to file must (i) identify by name each insider who failed to file on a timely basis 
Forms 3, 4, or 5 during the most recent fiscal year or prior fiscal years and (ii) set forth the 
number of late reports, the number of late-reported transactions, and any known failure to file.  
An issuer does not have an obligation under Item 405 to research or make inquiry regarding 
delinquent Section 16(a) filings beyond the review specified in the item.   
9. An issuer that files annual reports with the Commission on Form 10-K, such as 
Respondent, is required to include the Item 405 disclosure in its Form 10-K in Part III, or 
incorporate by reference to its Form 10-K the Item 405 disclosure made in the issuer’s definitive 
proxy or information statement for its annual meeting of shareholders for the election of 
directors, if that definitive proxy or information statement is filed with the Commission not later 
than 120 days after the end of the fiscal year covered by the Form 10-K.  If such definitive proxy 
or information statement is not filed with the Commission in the 120-day period, the information 
must be filed as part of the Form 10-K, or as an amendment to the Form 10-K filed not later than 
the end of the 120-day period.  To the extent disclosure is required by Item 405, materially false, 
misleading, or omitted Item 405 disclosures constitute a violation of Section 13(a) of the 
Exchange Act and Rule 13a-1.  No showing of scienter is necessary to establish a violation of 
Section 13(a).
4
   
Respondent Failed to Comply with Item 405 Disclosure Requirements 
10. As an issuer required to file annual reports on Form 10-K, Respondent is and has 
been at all relevant times required to disclose information concerning delinquent Section 16(a) 
filings by its insiders to the extent required by Item 405 of Regulation S-K.   
11. Respondent failed to make the required Item 405 disclosure for its 2019, 2020, 
and 2021 fiscal years by improperly omitting it from its Forms 10-K filed with respect to such 
fiscal years.  Respondent’s Forms 10-K filed with respect to such fiscal years purported to 
provide all Part III information required, such as information regarding its executive officers, 
directors, corporate governance and other required matters, but failed to include any Item 405 
disclosure and did not state that it was incorporating by reference any information from other 
                                                 
Reg. 12674 (Apr. 2, 2019), which among other things, permits an issuer to omit the disclosure if there are no Section 
16(a) delinquencies to report. 
 
4
   SEC v. McNulty, 137 F.3d 732, 740-41 (2d Cir. 1998).     

 
5 
 
filings.  An issuer may only omit the disclosure if there are no Section 16(a) delinquencies to 
report, and numerous Legacy insiders had multiple delinquent filings during each of its 2019, 
2020, and 2021 fiscal years.  Respondent also did not file an amendment to such Forms 10-K not 
later than 120 days after the end of the fiscal year covered by the Form 10-K to provide such 
information or file a definitive proxy statement no later than the end of the 120-day period that 
included such information. 
12. While Respondent’s fiscal year ends December 31, Respondent does not hold its 
annual meetings for the election of directors until late November or early December, and 
Respondent filed its definitive proxy statements for such annual meetings in late October or early 
November of each year.  Although Respondent included an Item 405 disclosure in these proxy 
statements with respect to the prior year ended December 31, this disclosure was not 
incorporated by reference into the Forms 10-K and was, in any event, approximately six months 
after the 120-day deadline for providing or incorporating such information in the Forms 10-K 
and nearly 10 months after the end of the fiscal years.
5
 
13. As a result of the conduct described above, Respondent failed to comply with its 
disclosure obligation to the extent required by Item 405 and violated Section 13(a) of the 
Exchange Act and Rule 13a-1 thereunder. 
Respondent Was a Cause of Certain Violations of Section 16(a) by its Insiders 
14. Although the Commission encourages the practice of many issuers to assist insiders 
in complying with Section 16(a) filing requirements, issuers who voluntarily accept certain 
responsibilities and then act negligently in the performance of those tasks may be liable as a cause 
of Section 16(a) violations by insiders.   
15. Since at least 2018, Respondent has voluntarily agreed with its officers and 
directors, as well as two other greater than 10% beneficial owners, to perform certain tasks in 
connection with the filing of Section 16(a) reports on their behalf, including the preparation and 
filing of all such reports for which Respondent had timely notification of the required 
information concerning the transactions.  However, on multiple occasions, Respondent acted 
negligently in its performance of such tasks and was a cause of Legacy insiders failing to file 
Section 16(a) reports on a timely basis.  The procedures and practices employed by Respondent 
                                                 
5
  The disclosures made in these definitive proxy statements also did not fully comply with the requirements 
of Item 405.  Among other things, Respondent’s disclosures with respect to the years 2019 to 2021 provided the 
names of insiders with delinquent filings and specified the number of late Forms filed, but failed to set forth the 
number of transactions that were not reported on a timely basis; in many instances the number of such transactions 
far exceeded the number of untimely Forms filed by such insider.  In addition, with respect to the disclosures 
covering the years 2019 and 2020, it omitted from its disclosure several untimely Forms 4. 

 
6 
 
were insufficient to the extent that those practices resulted in the recurrent failure to meet the 
two-business day filing deadline.   
16. For example, between July 2019 and July 2022, Respondent’s insiders filed more 
than 200 untimely Forms 4 to report transactions related to, among other things, open-market 
stock sales and award grants of stock and options to officers and directors.  Although Respondent 
had agreed to perform all tasks in connection with preparing and filing such reports, the reports 
were not timely filed due to Respondent's negligent procedures and practices. 
17. As a result of the conduct described above, Respondent was a cause of certain 
violations of Section 16(a) of the Exchange Act and Rule 16a-3 thereunder by Respondent’s 
insiders.   
Respondent’s Remedial Efforts 
18. In determining to accept the Offer, the Commission considered certain remedial 
acts undertaken by Respondent 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 Legacy cease and desist 
from committing or causing any violations and any future violations of Sections 13(a) and 16(a) of 
the Exchange Act and Rules 13a-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 $200,000 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:  

 
7 
 
 
Enterprise Services Center 
Accounts Receivable Branch 
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 
Legacy Housing Corporation 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, it shall not argue that it is entitled to, nor shall it 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 it 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. 
 
 
 By the Commission. 
 
 
 
       Vanessa A. Countryman 
       Secretary 

UNITED STATES OF AMERICA 

 Before the 

   SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES EXCHANGE ACT OF 1934 

Release No. 101172 / September 25, 2024 

                                                               

ADMINISTRATIVE PROCEEDING 

File No. 3-22188 

 

 

 

In the Matter of 

 

Legacy Housing 

Corporation, 

 

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 Legacy Housing Corporation 

(“Legacy” 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, 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 issuer reporting requirements and 

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 class of equity security registered under Section 12 of the 

Exchange Act, and any beneficial owners of greater than 10% of such class (collectively, 

“insiders”), 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. Reporting issuers are required to disclose in the proxy statement for the issuer’s 

annual meeting, or its annual report, Section 16 reporting delinquencies by its insiders.  Although 

insiders remain responsible for the timeliness and accuracy of their required Section 16(a) reports, 

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 timely filing.”  

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). 

4. Since 2018, Respondent has been a reporting issuer and its insiders have been 

required to file Section 16(a) reports.  On numerous occasions, Respondent’s insiders violated 

Section 16(a) by failing to timely file required reports.  Respondent failed to comply with its 

disclosure obligations to report such delinquencies.  In addition, Respondent was a cause of 

many of the Section 16(a) violations by its insiders as a result of Respondent’s negligence in 

performing certain tasks it voluntarily agreed to undertake in connection with the preparation and 

filing of Section 16(a) reports on their behalf.  

Respondent 

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

Legacy’s common stock is and has been at all relevant times registered with the Commission under 

                                                 
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 

 

Section 12 of the Exchange Act and trades on the NASDAQ (ticker: LEGH).  Legacy is required to 

file annual reports on Form 10-K pursuant to Section 13(a) of the Exchange Act and Rule 13a-1 

thereunder. 

Applicable Legal Framework 

6. 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 his or her beneficial ownership of all securities of the issuer.  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 during the issuer’s most recent fiscal year 

and any transactions eligible for deferred reporting (unless the corporate insider has previously 

reported all such transactions).  Insiders are required to file the reports electronically on EDGAR.  

There is no state of mind requirement for violations of Section 16(a) and the rules thereunder.2    

7. Section 13(a) of the Exchange Act requires issuers that have securities registered 

pursuant to Section 12 of the Exchange Act to file such periodic and other reports as the 

Commission may prescribe and in conformity with such rules as the Commission may promulgate.   

Exchange Act Rule 13a-1 requires such issuers to file annual reports with the Commission 

containing specified information.  In 1991, the Commission adopted Item 405 of Regulation S-K to 

help address compliance with Section 16(a) by requiring reporting issuers to disclose in annual 

proxy and information statements or annual reports information regarding delinquent Section 

16(a) filings by insiders.3   

                                                 
2   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. 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”); 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 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).  Negligence is sufficient to establish liability for causing such violations.  See KPMG 

Peat Marwick LLP, 74 SEC Docket 357, 2001 WL 47245, at *19 (Jan. 19, 2001) (Commission opinion) 

(“[N]egligence is sufficient to establish ‘causing’ liability under Exchange Act Section 21C(a) … in cases in which a 

person is alleged to ‘cause’ a primary violation that does not require scienter.”). 

3   Ownership Reports and Trading by Officers, Directors and Principal Security Holders, SEC Release 34-

28869, 56 Fed. Reg. 7242, 7259-60 (Feb. 21, 1991); 17 C.F.R. § 229.405.  The Commission amended Item 405 in 

FAST Act Modernization and Simplification of Regulation S-K, SEC Release 33-10618 (Mar. 20, 2019), 84 Fed. 

 



 

4 

 

8. Item 405 of Regulation S-K specifically requires an issuer to disclose any late 

filing or known failure by an insider to file a report required by Section 16(a).  In determining 

whether such disclosure is required, the issuer may rely on a review of the Forms 3 and 4 filed 

during the most recent fiscal year, and Forms 5 filed with respect to the most recent fiscal year, 

by the issuer’s insiders.  Section 16(a) reports are posted on EDGAR, and thus are readily 

available to issuers to evaluate their timeliness.  A “known” failure to file includes, but is not 

limited to, a failure to file a Form 3, which is required of all insiders, and a failure to file a Form 

5 in the absence of a written representation that no Form 5 is required, unless the issuer 

otherwise knows that no Form 5 is required.  The Item 405 disclosure of any late filings or 

known failures to file must (i) identify by name each insider who failed to file on a timely basis 

Forms 3, 4, or 5 during the most recent fiscal year or prior fiscal years and (ii) set forth the 

number of late reports, the number of late-reported transactions, and any known failure to file.  

An issuer does not have an obligation under Item 405 to research or make inquiry regarding 

delinquent Section 16(a) filings beyond the review specified in the item.   

9. An issuer that files annual reports with the Commission on Form 10-K, such as 

Respondent, is required to include the Item 405 disclosure in its Form 10-K in Part III, or 

incorporate by reference to its Form 10-K the Item 405 disclosure made in the issuer’s definitive 

proxy or information statement for its annual meeting of shareholders for the election of 

directors, if that definitive proxy or information statement is filed with the Commission not later 

than 120 days after the end of the fiscal year covered by the Form 10-K.  If such definitive proxy 

or information statement is not filed with the Commission in the 120-day period, the information 

must be filed as part of the Form 10-K, or as an amendment to the Form 10-K filed not later than 

the end of the 120-day period.  To the extent disclosure is required by Item 405, materially false, 

misleading, or omitted Item 405 disclosures constitute a violation of Section 13(a) of the 

Exchange Act and Rule 13a-1.  No showing of scienter is necessary to establish a violation of 

Section 13(a).4   

Respondent Failed to Comply with Item 405 Disclosure Requirements 

10. As an issuer required to file annual reports on Form 10-K, Respondent is and has 

been at all relevant times required to disclose information concerning delinquent Section 16(a) 

filings by its insiders to the extent required by Item 405 of Regulation S-K.   

11. Respondent failed to make the required Item 405 disclosure for its 2019, 2020, 

and 2021 fiscal years by improperly omitting it from its Forms 10-K filed with respect to such 

fiscal years.  Respondent’s Forms 10-K filed with respect to such fiscal years purported to 

provide all Part III information required, such as information regarding its executive officers, 

directors, corporate governance and other required matters, but failed to include any Item 405 

disclosure and did not state that it was incorporating by reference any information from other 

                                                 
Reg. 12674 (Apr. 2, 2019), which among other things, permits an issuer to omit the disclosure if there are no Section 

16(a) delinquencies to report. 

 
4   SEC v. McNulty, 137 F.3d 732, 740-41 (2d Cir. 1998).     



 

5 

 

filings.  An issuer may only omit the disclosure if there are no Section 16(a) delinquencies to 

report, and numerous Legacy insiders had multiple delinquent filings during each of its 2019, 

2020, and 2021 fiscal years.  Respondent also did not file an amendment to such Forms 10-K not 

later than 120 days after the end of the fiscal year covered by the Form 10-K to provide such 

information or file a definitive proxy statement no later than the end of the 120-day period that 

included such information. 

12. While Respondent’s fiscal year ends December 31, Respondent does not hold its 

annual meetings for the election of directors until late November or early December, and 

Respondent filed its definitive proxy statements for such annual meetings in late October or early 

November of each year.  Although Respondent included an Item 405 disclosure in these proxy 

statements with respect to the prior year ended December 31, this disclosure was not 

incorporated by reference into the Forms 10-K and was, in any event, approximately six months 

after the 120-day deadline for providing or incorporating such information in the Forms 10-K 

and nearly 10 months after the end of the fiscal years.5 

13. As a result of the conduct described above, Respondent failed to comply with its 

disclosure obligation to the extent required by Item 405 and violated Section 13(a) of the 

Exchange Act and Rule 13a-1 thereunder. 

Respondent Was a Cause of Certain Violations of Section 16(a) by its Insiders 

14. Although the Commission encourages the practice of many issuers to assist insiders 

in complying with Section 16(a) filing requirements, issuers who voluntarily accept certain 

responsibilities and then act negligently in the performance of those tasks may be liable as a cause 

of Section 16(a) violations by insiders.   

15. Since at least 2018, Respondent has voluntarily agreed with its officers and 

directors, as well as two other greater than 10% beneficial owners, to perform certain tasks in 

connection with the filing of Section 16(a) reports on their behalf, including the preparation and 

filing of all such reports for which Respondent had timely notification of the required 

information concerning the transactions.  However, on multiple occasions, Respondent acted 

negligently in its performance of such tasks and was a cause of Legacy insiders failing to file 

Section 16(a) reports on a timely basis.  The procedures and practices employed by Respondent 

                                                 
5  The disclosures made in these definitive proxy statements also did not fully comply with the requirements 

of Item 405.  Among other things, Respondent’s disclosures with respect to the years 2019 to 2021 provided the 

names of insiders with delinquent filings and specified the number of late Forms filed, but failed to set forth the 

number of transactions that were not reported on a timely basis; in many instances the number of such transactions 

far exceeded the number of untimely Forms filed by such insider.  In addition, with respect to the disclosures 

covering the years 2019 and 2020, it omitted from its disclosure several untimely Forms 4. 



 

6 

 

were insufficient to the extent that those practices resulted in the recurrent failure to meet the 

two-business day filing deadline.   

16. For example, between July 2019 and July 2022, Respondent’s insiders filed more 

than 200 untimely Forms 4 to report transactions related to, among other things, open-market 

stock sales and award grants of stock and options to officers and directors.  Although Respondent 

had agreed to perform all tasks in connection with preparing and filing such reports, the reports 

were not timely filed due to Respondent's negligent procedures and practices. 

17. As a result of the conduct described above, Respondent was a cause of certain 

violations of Section 16(a) of the Exchange Act and Rule 16a-3 thereunder by Respondent’s 

insiders.   

Respondent’s Remedial Efforts 

18. In determining to accept the Offer, the Commission considered certain remedial 

acts undertaken by Respondent 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 Legacy cease and desist 

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

the Exchange Act and Rules 13a-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 $200,000 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:  



 

7 

 

 

Enterprise Services Center 

Accounts Receivable Branch 

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 

Legacy Housing Corporation 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, it shall not argue that it is entitled to, nor shall it 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 it 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. 

 

 

 By the Commission. 

 

 

 

       Vanessa A. Countryman 

       Secretary 


	Respondent