Defendant Name:
KCAP Financial, Inc.
Defendant Type:
Public Company
SIC Code:
6726
CUSIP:
48668E10
Initial Case Details
Legal Case Name
In the Matter of KCAP Financial, Inc., Dayl W. Pearson, Michael I. Wirth, CPA and R. Jonathan Corless
First Document Date
28-Nov-2012
Initial Filing Format
Administrative Action
File Number
3-15109
Allegation Type
Issuer Reporting and Disclosure
AAER
3425
Violations Alleged
Additionally,
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Rule 12b-20 of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Rule 12b-20 of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Rule 12b-20 of the Exchange Act.
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(a) of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(a) of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(a) of the Exchange Act.
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-1 of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-1 of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-1 of the Exchange Act.
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-11 of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-11 of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-11 of the Exchange Act.
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-13 of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-13 of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Rule 13a-13 of the Exchange Act.
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(b)(2)(A) of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(b)(2)(A) of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(b)(2)(A) of the Exchange Act.
Michael I. Wirth is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(b)(2)(B) of the Exchange Act.
Dayl W. Pearson is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(b)(2)(B) of the Exchange Act.
R. Jonathan Corless is alleged to have caused KCAP Financial, Inc.'s violation of Sec 13(b)(2)(B) of the Exchange Act.
Resolutions
First Resolution Date
28-Nov-2012
Headline Total Penalty and Disgorgement
$125,000
Related Documents:
34-68307
28-Nov-2012
Administrative Proceeding
Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Civil Penalties and a Cease-and-Desist Order
On November 28, 2012 the Commission accepted respondents' offers of settlement and imposed civil penalties and a cease-and-desist order. The SEC alleged that KCAP Financial, Inc., a business development company, from the end of 2008 to the middle of 2009 "materially overstated the value of its asset portfolio in its reported financial statements." In particular the SEC alleged that: "During the 2008-2009 financial crisis, KCAP did not account for certain market-based activity in determining the fair value of its debt securities. KCAP also did not account for certain market-based activity for its two largest [collateralized loan obligations fund (CLO)] investments by fair valuing those investments at KCAP's cost. Moreover, KCAP's public filings were materially misleading because they stated that these two CLOs were valued using a discounted cash flow method that incorporated market data, when the CLOs were valued at KCAP's cost."
2012-242
28-Nov-2012
Press Release--Administrative Proceeding
SEC Charges New York-Based Fund Executives for Overvaluing Assets During Financial Crisis
On November 28, 2012, the SEC announced that it charged publicly traded fund KCAP Financial, Inc. ("KCAP"), regulated as a business development company, and three top executives--CEO Dayl W. Pearson, CIO R. Jonathan Corless, and former CFO Michael I. Wirth--with overstating the fund's assets during the financial crisis. The fund's asset portfolio consisted primarily of corporate debt securities and investments in collateralized loan obligations. According to the SEC's order instituting administrative proceedings, KCAP did not record and report the fair value of its assets in accordance with Generally Accepted Accounting Principles--FAS 157 in particular, which requires assets to be fair valued based on an "exit price" that reflects the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. KCAP's overvaluation and internal controls failures violated the reporting, books and records, and internal controls provisions of the federal securities laws. Without admitting or denying the findings, KCAP, Pearson, Corless, and Wirth consented to the SEC's order requiring them to cease and desist from committing or causing any violations or any future violations of these federal securities laws. Additionally, Pearson, Corless, and Wirth agreed to pay financial penalties in the amounts of $50,000, $25,000, and $50,000, respectively.
Other Defendants in Action:
