SEC Charges Arizona Company And Two Senior Executives In Connection With Misleading Disclosures About Material Contract
Sept. 17, 2018
File No. 3-18770
September 17, 2018 – The Securities and Exchange Commission today announced fraud charges against a Scottsdale, AZ-based stormwater management and industrial waste water treatment company for misleading investors about the status of a material contract that the company entered into with Nassau County, New York. The company agreed to pay over $130,000 to settle the SEC charges. Separately, the company’s CEO and CFO, who were also charged, have agreed to settle the SEC charges.
The SEC’s orders find that Abtech Holdings Inc. entered into a contract with Nassau County in October 2013. Abtech disclosed that the material contract was a design-build-operate project and that the company would earn approximately 95% of the up to $12 million contract amount in the first year. Over the next year, work under the contract was delayed and Abtech’s CEO Glenn R. Rink and its CFO Lane J. Castleton became aware of facts tending to show that several contractual contingencies that effected payments to Abtech had not been realized. Specifically, state legislation, required in New York State to proceed with a design-build-operate contract, had not been obtained, and Nassau County had not secured the funding to pay Abtech the full amount under the contract. Yet, Abtech’s third quarter 2014 Form 10-Q and 2014 Form 10-K, which were reviewed, edited, and signed by Castleton and Rink, did not disclose these contingencies.
Without admitting or denying the SEC’s findings, Abtech consented to the entry of an order requiring it to cease and desist from committing or causing any violations or any future violations of Section 17(a)(2) of the Securities Act and Section 13(a) of the Securities Exchange Act and certain related rules thereunder, and agreed to pay more than $33,000 in disgorgement and pre-judgment interest, and a civil penalty of $100,000. Both Rink and Castleton, without admitting or denying the findings, agreed to the entry of SEC orders requiring them to cease and desist from committing or causing any violations or any future violations of the same provisions, and agreed to pay civil penalties of $60,000 and $35,000 respectively.
The SEC’s investigation was conducted by Ann Marie Preissler, Elizabeth Butler, Neil Hendelman, Scott York, and Thomas P. Smith, Jr. of the New York Regional Office and was supervised by Sanjay Wadhwa.