2014-11-05 SEC Press pdf 27 KB 9,787 chars

In re Green Automotive Company

Exhibit of SEC Sanctions 10 Companies for Disclosure Failures Surrounding Financing Deals and Stock Dilution

summary

Green Automotive Company violated securities reporting rules by failing to disclose over 170 million unregistered share issuances and a material financing agreement, and misstating its share count by over 90 million shares in its 2013 Form 10-K, resulting in a cease-and-desist order and a $50,000 civil penalty.

paragraph

Green Automotive Company, a Nevada-based reporting issuer quoted on OTC Link, failed to file required Form 8-K disclosures between November 2013 and April 2014 regarding a material financing agreement and over 170 million unregistered share issuances, which exceeded 20% of its outstanding shares at key points. It also falsely reported its common stock outstanding by more than 90 million shares in its March 31, 2014 Form 10-K, violating Section 13(a) of the Exchange Act and related disclosure rules. The SEC accepted a settlement in which Green Automotive consented to a cease-and-desist order and agreed to pay a $50,000 civil penalty in nine installments through July 2015.

narrative

Green Automotive Company, a Nevada-based smaller reporting company quoted on OTC Link under the symbol GACR, violated Section 13(a) of the Securities Exchange Act of 1934 by failing to disclose material events in a timely manner. Between November 18, 2013, and April 9, 2014, the company issued over 170 million shares of unregistered common stock to a financing company and other parties, exceeding five percent of its outstanding shares as early as January 13, 2014, and ultimately surpassing twenty percent of its reported share count. Despite regulatory requirements under Items 1.01 and 3.02 of Form 8-K, Green Automotive never filed disclosures for the financing agreement or the unregistered sales. In its March 31, 2014 Form 10-K, it misstated its shares outstanding by more than 90 million shares, or over twenty percent, while falsely claiming compliance with reporting obligations. The SEC found these failures constituted willful violations of disclosure and accuracy requirements. Green Automotive consented to a cease-and-desist order without admitting or denying the findings, and agreed to pay a $50,000 civil penalty in nine installments between November 2014 and July 2015, with failure to pay triggering full liability plus interest.

Enriched metadata

Scheme: unregistered-securities (80%)
Outcome: settled
Civil penalty: $50,000

Classified unregistered-securities(confidence 80%). EDGAR detection: forms Form D/S-1· recall 41% / precision 30%. detection rule →

Extracted insights

Dollar amounts 3

$50K $50,000 $10K–$100K
$10K $10,000 $10K–$100K
$5K $5,000 <$10K

Entities 4

person green automotive
company green automotive company
company nevada company
company shares of common stock to the financing company

Triples 8

Commission deems it appropriate that cease-and-desist proceedings be instituted
Respondent has submitted Offer of Settlement
Commission has determined to accept Offer of Settlement
Respondent consents to entry of this Order
Green Automotive Company is Nevada company
Green Automotive has been registered with the Commission since September 26, 2010
Green Automotive entered into agreement with a financing company on December 4, 2013
Green Automotive issued shares of common stock to the financing company

PDF

In re Green Automotive Company · Source

Text layers

Extracted body text (9,787c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73521 / November 5, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16252

In the Matter of

Green Automotive Company

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

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 Green Automotive Company (“ Green
Automotive” 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 Green Automotive 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 F indings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:

Company Background

1. Green Automotive Company is a Nevada company headquartered in Newport
Beach, California. Green Automotive is a smaller reporting company under Rule 12b-2 of the
Exchange Act and has been registered with the Commission under Section 12(g) of the Exchange
Act since September 26, 2010. Green Automotive’s last-filed periodic report was the Form 10-Q
for the period ended March 31, 2014. Its shares are quoted on OTC Link (formerly “pink sheets”)
operated by OTC Markets Group Inc. under the symbol GACR.

Applicable Reporting Requirements Concerning the Issuance of Unregistered Shares

2. Under Item 1.01 of Form 8-K, a registrant must disclose its entry into a material
definitive agreement that provides for obligations that are material to and enforceable against the
registrant. Under Item 3.02 of Form 8-K, a smaller reporting company must disclose the
unregistered sales of equity securities unless such sales, in aggregate since its last report filed under
Item 3.02 or its last periodic report, whichever is more recent, constitute less than five percent of
the number of shares outstanding of the class of equity securities sold. For both items, the
registrant must file within four business days of the date of the occurrence or when such agreement
becomes enforceable against the registrant.

3. Form 10-K requires a registrant to disclose the number of shares outstanding of the
registrant’s common stock as of the latest practicable date. The information reported in a Form 10-
K is required to be true, correct, and complete. See SEC v. Dauplaise, No. 6:05CV1391, 2006 WL
449175 at *7 (M.D. Fla. Feb. 22, 2006).

Green Automotive Failed to Disclose the Issuance of Unregistered Shares
and the Existence of the Related Financing Agreement

4. On December 4, 2013, Green Automotive entered into an agreement with a
financing company (“financing agreement”) pursuant to which Green Automotive issued shares of

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
common stock to the financing company purportedly in reliance on a registration exemption found
in Section 3(a)(10) of the Securities Act of 1933 (“Securities Act”). The financing agreement
provided for obligations that were material to and enforceable against Green Automotive.

5. Green Automotive failed to file a Form 8-K with the Commission, on or before
December 10, 2013, or thereafter, disclosing the financing agreement.

6. Between November 18, 2013, and March 20, 2014, Green Automotive sold more
than 100 million shares of its common stock to the financing company and other parties in
transactions that were not registered under the Securities Act. By January 13, 2014, the common
stock sold, in the aggregate, exceeded five percent of the number of shares of common stock
outstanding reported on Green Automotive’s November 14, 2013, Form 10-Q. Ultimately, the
common stock sold exceeded twenty percent of the number of shares of common stock outstanding
reported on Green Automotive’s November 14, 2013, Form 10-Q.

7. Green Automotive failed to file a Form 8-K with the Commission between January
13, 2014, and March 30, 2014, disclosing the unregistered sales of equity securities.

8. On March 31, 2014, Green Automotive filed with the Commission its Form 10-K
for the fiscal year ended December 31, 2013, and incorrectly reported the number of shares
outstanding by more than 90 million shares, or more than twenty percent. In the Form 10-K,
Green Automotive disclosed the existence of the financing agreement.

9. Between March 31, 2014, and April 9, 2014, Green Automotive sold more than 28
million shares of its common stock in transactions that were not registered under the Securities
Act. By April 2, 2014, the common stock sold, in the aggregate, exceeded five percent of the
number of shares of common stock outstanding reported on Green Automotive’s March 31, 2014,
Form 10-K. Ultimately, the common stock sold exceeded seven percent of the number of shares of
common stock outstanding reported on Green Automotive’s March 31, 2014, Form 10-K.

10. Green Automotive failed to file a Form 8-K with the Commission between April 2,
2014, and May 19, 2014, disclosing the unregistered sales of equity securities.

11. Between May 22, 2014, and July 10, 2014, Green Automotive sold more than 46
million shares of its common stock in transactions that were not registered under the Securities
Act. By June 19, 2014, the common stock sold, in the aggregate, exceeded five percent of the
number of shares of common stock outstanding reported on Green Automotive’s May 20, 2014,
Form 10-Q. Ultimately, the common stock sold exceeded seven percent of the number of shares of
common stock outstanding reported on Green Automotive’s May 20, 2014, Form 10-Q.

12. Green Automotive failed to file a Form 8-K with the Commission between June 19,
2014, and July 16, 2014, disclosing the unregistered sales of equity securities.

13. As a result of the conduct described above, Green Automotive violated Section
13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 12b-20 thereunder, which require every

4
issuer of a security registered pursuant to Section 12 of the Exchange Act to file with the
Commission information as the Commission may require, including annual reports on Form 10-
K and current reports on Form 8-K to disclose the occurrence of certain events.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Green Automotive’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Green Automotive cease
and desist from committing or causing any violations and any future violations of Section 13(a) of
the Exchange Act and Rules 13a-1, 13a-11, and 12b-20 thereunder.

B. Respondent shall pay civil penalties of $50,000 to the Securities and Exchange
Commission. Payment shall be made in the following installments: $10,000 on or before
November 15, 2014; $5,000 on or before December 15, 2014; $5,000 on or before January 15,
2015; $5,000 on or before February 15, 2015; $5,000 on or before March 15, 2015; $5,000 on or
before April 15, 2015; $5,000 on or before May 15, 2015; $5,000 on or before June 15, 2015; and
$5,000 on or before July 15, 2015. If any payment is not made by the date the payment is required
by this Order, the entire outstanding balance of civil penalties, plus any additional interest accrued
pursuant to 31 U.S.C. 3717, shall be due and payable immediately, without further application.
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
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

5
Payments by check or money order must be accompanied by a cover letter identifying
Green Automotive 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 William P. Hicks, Division of
Enforcement, Securities and Exchange Commission, 950 East Paces Ferry Rd. N.E., Suite 900,
Atlanta, Georgia 30326.

By the Commission.

Brent J. Fields
Secretary

OCR text (9,806c · tika · 95% conf)

UNITED STATES OF AMERICA

Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 73521 / November 5, 2014

ADMINISTRATIVE PROCEEDING
File No. 3-16252

In the Matter of

Green Automotive Company

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

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 Green Automotive 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.

III.

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

Company Background

Applicable Reporting Requirements Concerning the Issuance of Unregistered Shares

Green Automotive Failed to Disclose the Issuance of Unregistered Shares
and the Existence of the Related Financing Agreement

4. On December 4, 2013, Green Automotive entered into an agreement with a
financing company (“financing agreement”) pursuant to which Green Automotive issued shares of

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.

common stock to the financing company purportedly in reliance on a registration exemption found
in Section 3(a)(10) of the Securities Act of 1933 (“Securities Act”). The financing agreement
provided for obligations that were material to and enforceable against Green Automotive.

5. Green Automotive failed to file a Form 8-K with the Commission, on or before
December 10, 2013, or thereafter, disclosing the financing agreement.

7. Green Automotive failed to file a Form 8-K with the Commission between January
13, 2014, and March 30, 2014, disclosing the unregistered sales of equity securities.

10. Green Automotive failed to file a Form 8-K with the Commission between April 2,
2014, and May 19, 2014, disclosing the unregistered sales of equity securities.

12. Green Automotive failed to file a Form 8-K with the Commission between June 19,
2014, and July 16, 2014, disclosing the unregistered sales of equity securities.

13. As a result of the conduct described above, Green Automotive violated Section
13(a) of the Exchange Act and Rules 13a-1, 13a-11, and 12b-20 thereunder, which require every

issuer of a security registered pursuant to Section 12 of the Exchange Act to file with the
Commission information as the Commission may require, including annual reports on Form 10-
K and current reports on Form 8-K to disclose the occurrence of certain events.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Green Automotive’s Offer.

Accordingly, it is hereby ORDERED that:

(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
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
Green Automotive 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 William P. Hicks, Division of
Enforcement, Securities and Exchange Commission, 950 East Paces Ferry Rd. N.E., Suite 900,
Atlanta, Georgia 30326.

By the Commission.

Brent J. Fields
Secretary