UNITED STAES: SEC Charges Investment Adviser with Schedule 13D Reporting Violations

Thursday November 5 2020

The Securities and Exchange Commission has announced settled charges against WCAS Management Corporation (Welsh Carson) in connection with violations by five private funds of the beneficial ownership reporting provisions of the federal securities laws.

According to the SEC’s order, in 2016, Welsh Carson, the investment manager of the private funds, began purchasing shares of Hanger, Inc. for the purpose of acquiring the company and taking it private. The order finds that, in July 2016, the funds had acquired 7% of Hanger’s outstanding common stock. The order further finds that, while the funds filed a Schedule 13D, commonly known as a beneficial owner report, disclosing its intent with regard to its purchases, it subsequently failed to file timely Schedule 13D amendments as required in two separate circumstances. First, the funds failed to file an amendment when Welsh Carson abandoned efforts to acquire Hanger and took steps to liquidate the position in June of 2019. Second, the funds failed to file an amendment in July of 2019 when it began selling its entire position in Hanger.

The SEC’s order finds that Welsh Carson caused the private funds to violate the beneficial ownership reporting provisions of Section 13(d) of the Exchange Act and Rule 13d-2 thereunder by failing to file timely amendments to the previously filed Schedule 13D.  Without admitting or denying the SEC’s findings, Welsh Carson agreed to a cease and desist order and to pay a penalty of $100,000.

The SEC’s investigation was conducted by H. Norman Knickle and supervised by Fuad Rana and Anita B. Bandy.  The investigation was assisted by Ted Yu and Nicholas Panos from the Division of Corporation Finance’s Office of Mergers and Acquisitions.

Click on the link for further information.