Fidelity’s National Financial Services to Pay $2.5M to Settle SEC Charges

NFS sold FuelCell common stock to the public on behalf of the issuer in five at-the-market delayed shelf offerings, according to the SEC. For each offering, FuelCell filed a base prospectus with the registration statement, but failed to file a final prospectus as required when it took the securities “off the shelf” and sold them into the market, the regulator said.

The order charging NFS found that, as the statutory underwriter, NFS had an obligation to ensure delivery of final prospectuses, which describe the specific type and quantity of securities being offered, the specific manner and timing of distribution, and the nature and terms of agreements with underwriters, dealers and agents, the SEC said.

That order further found that NFS had no policies and procedures in place at the trading desk conducting the sales that could have prevented or detected the violations, and that NFS did not take timely and effective corrective action when certain underlying facts concerning these sales came to the attention of compliance and legal personnel at NFS, the SEC alleged.

The SEC’s orders found that NFS and FuelCell violated the prospectus delivery provisions of Section 5(b) of the Securities Act of 1933. The order charging NFS found it violated the underwriter prospectus delivery provisions of Securities Act Rule 173, and failed reasonably to supervise the traders that sold the FuelCell securities within the meaning of Section 15(b)(4)(E) of the Securities Exchange Act of 1934 and Section 203(e)(6) of the Investment Advisers Act of 1940, the regulator said.