SEC Charges Drone Seller for Failing to Ensure Accuracy of Financial Statements in Advance of Planned IPO
Sept. 28, 2018
File No. 3-18856
September 28, 2018 - The Securities and Exchange Commission today announced that San Jose, California-based Mota Group, Inc. and its Chief Executive Officer settled charges that they negligently failed to ensure Mota filed accurate financial statements with the SEC in connection with the proposed sale of its securities in a planned initial public offering in 2017.
According to the SEC's order, Mota, which sells drones, toys and other consumer products, and its CEO, Mota "Michael" Faro, provided inaccurate sales information to the auditing firm that was reviewing its financial statements in advance of Mota's filing of a Form S-1 registration statement in connection with its planned IPO. As a result, Mota's registration statement overstated its revenue for the six months ended December 31, 2016 by $545,481, or approximately 15 percent. The registration statement was never declared effective and no securities were sold under it.
The SEC's order instituting settled cease-and-desist proceedings finds that Mota and Faro violated Section 17(a)(3) of the Securities Act of 1933, an antifraud provision of the federal securities laws. Without admitting or denying the SEC's findings, Mota and Faro agreed to cease and desist from committing or causing further violations of that provision, and Faro agreed to pay a $10,000 civil penalty. As part of the settlement, Mota agreed to withdraw its registration statement.
The SEC's investigation was conducted by Robert J. Durham Jr. and John A. Roscigno, and supervised by Jeremy E. Pendrey of the San Francisco Regional Office.