A failed bid to acquire U.S. Steel has led to a costly settlement for Pittsburgh-based Esmark Inc., as the U.S. Securities and Exchange Commission (SEC) announced Friday that the company and its founder have been fined for making false financial claims regarding their ability to complete the acquisition.
SEC Settlement with Esmark : Esmark’s False Financial Claim
The SEC revealed that Esmark and its founder, James Bouchard, agreed to pay civil penalties of $500,000 and $100,000, respectively. The penalties stemmed from their public declaration that Esmark had $7.8 billion in cash available to acquire U.S. Steel. The SEC alleged that this claim was untrue, and that Esmark did not possess the necessary funds. The bid to acquire the steel manufacturing giant was withdrawn before any finalization occurred.
“Bouchard and Esmark could not have completed the tender offer for U.S. Steel that they announced,” said Antonia M. Apps, director of the SEC’s New York regional office, in a statement Friday. “Investors should be able to trust companies’ and executives’ public statements.”
SEC Settlement with Esmark
The SEC settlement with Esmark underscores the importance of transparency in financial disclosures. By falsely claiming to have the resources to back a major acquisition, Esmark misled investors, according to the SEC. This settlement serves as a reminder to corporations and executives that their public statements, especially those related to financial capability, must be accurate and truthful.
