SEC v. Stiefel Labs Fair Fund

July 12, 2022 Update From Distribution Agents Bob Levenson and Chris Martin

We are pleased to report that all 231 checks initially sent to Eligible Shareholders listed below have now been deposited or otherwise accounted for. There are no more outstanding checks. We are also happy to report that on June 28, 2022, the District Court entered an order granting the Distribution Agents’ motion to make a supplemental distribution to six additional Eligible Shareholders who contacted the Distribution Agents after the initial distribution checks were mailed out. They also are listed below. Once those checks are negotiated, we will post further updates, including a final accounting of the Fair Fund to the District Court.

The following shareholders received checks in the initial distribution:

1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 32, 33, 34, 35, 36, 37, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50, 52, 53, 54, 55, 56, 57, 58, 60, 61, 62, 63, 64, 65, 66, 67, 69, 70, 71, 72, 73, 75, 76, 77, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 95, 96, 98, 99, 100, 101, 102, 103, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 122, 123, 124, 126, 127, 128, 129, 130, 131, 132, 135, 136, 138, 139, 140, 141, 142, 143, 144, 145, 146, 147, 148, 151, 153, 155, 156, 158, 159, 160, 161, 163, 164, 165, 167, 168, 169, 170, 171, 172, 173, 175, 176, 177, 178, 179, 180, 181, 182, 183, 184, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 196, 197, 198, 199, 200, 201, 205, 208, 210, 211, 212, 213, 214, 215, 217, 219, 220, 221, 223, 224, 225, 226, 227, 228, 229, 230, 231, 233, 234, 235, 236, 239, 240, 241, 243, 244, 245, 246, 247, 248, 249, 250, 253, 254, 255, 256, 257, 258.

The following shareholders will receive checks in the supplemental distribution: 150, 152, 154, 206, 209, 242.

The following shareholders did not receive a distribution in the initial or supplemental distribution because we did not hear from them or received incomplete documentation: 26, 31, 38, 51, 59, 68, 74, 78, 94, 97, 104, 105, 119, 120, 121, 125, 133, 134, 137, 149, 157, 162, 166, 174, 195, 202, 203, 204, 207, 216, 218, 222, 232, 237, 238, 251, 252.

If you have further questions, you can contact the distribution agents at the emails below:

Bob Levenson, levensonr@sec.gov

Chris Martin, martinc@sec.gov

A copy of the Court’s Order Approving the Distribution Plan, the Motion, the proposed Distribution Plan and the Objections as well as the SEC’s Replies are posted on the Documents tab of this website located here. As well as on the SEC’s Information for Harmed Investors website, which can be found https://www.sec.gov/divisions/enforce/claims/stiefel-laboratories.htm.

Background

In December 2011, the SEC filed a complaint against Stiefel Laboratories Inc. (“Stiefel Labs”) and Charles W. Stiefel (“Stiefel”) (collectively, the “Defendants”). Among other things, the SEC alleged the Defendants violated Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Exchange Act Rule 10b-5. In general, the Complaint alleged fraudulent conduct by Stiefel Labs and Stiefel during the repurchase of Stiefel Labs stock shares from employee shareholders from 2006 through April 20, 2009.

The SEC staff and the Defendants entered into a proposed settlement at Court-ordered mediation on February 26, 2020, in which the Defendants agreed to collectively pay $37 million. The SEC Commissioners later approved the settlement. As a result, on June 4, 2020, the Court created a Fair Fund, so the penalties, along with the disgorgement and prejudgment interest paid by the Defendants, can be distributed to those harmed by the Defendants’ conduct described in the Complaint. The Court also entered Final Judgments by consent against Stiefel Labs and Stiefel. Specifically, the Final Judgment against Stiefel Labs orders the company to pay disgorgement of $23 million, prejudgment interest on disgorgement of $2.1 million, and a civil penalty of $1.3 million, while the Final Judgment against Stiefel orders him to pay disgorgement of $9.3 million, prejudgment interest on disgorgement of $930,000, and a civil penalty of $260,000. The $37 million that the Defendants have collectively paid, subtracting expenses and adding interest earned, now constitute the Fair Fund in this case.

On June 12, 2020, the Court entered an order appointing Miller Kaplan Arase LLP as the Tax Administrator for the Fair Fund, and Robert Levenson and Christopher Martin, SEC employees, as Distribution Agents to administer the distribution of the Fair Fund. On August 4, 2020, the Court entered an Order allowing the Distribution Agents to engage Epiq Class Action & Claims Solutions, Inc. as the Third Party Administrator to assist in implementing the Distribution Plan under the direction of the Distribution Agents.

Additional Court Documents