RBC to pay $2.5 million for proxy statement disclosure violations
Staff Writer |
The Securities and Exchange Commission (SEC) announced that RBC Capital Markets has agreed to a $2.5 million settlement.
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The settlement is for causing materially false and misleading disclosures about its valuation analysis in a proxy statement for Rural/Metro Corporation’s sale in 2011 to a private equity firm.
RBC was the lead financial adviser to Rural/Metro, a medical transportation services provider, and received a $500,000 fee for a fairness opinion presented to Rural/Metro’s board as it considered the sale.
An SEC investigation found that RBC’s presentation contained materially false and misleading statements which made the bid look more attractive, and caused that information to be included in the proxy statement Rural/Metro filed in May 2011 to solicit shareholder approval for the sale.
The SEC found that RBC’s presentation described one of its valuations as being based on Wall Street analysts’ “consensus projections†of Rural/Metro’s 2010 adjusted EBITDA, a pretax earnings figure. In fact, the valuation did not reflect analysts’ research or a “consensus†view, but was Rural/Metro’s actual 2010 adjusted EBITDA of $69.8 million.
Rural/Metro’s proxy statement included a summary of RBC’s valuation analysis, which falsely stated that RBC used “Wall Street research analyst consensus projections†for 2010 “consensus†adjusted EBITDA. The SEC order found that in addition to being false, the proxy statement was misleading because shareholders would be led to believe the analysis reflected the “consensus†calculation of $76.8 million.
The SEC also found that RBC caused the proxy statement to include a misleading disclosure that suggested RBC had relied on another valuation analysis in its fairness presentation to Rural/Metro’s board when, in fact, RBC did not rely on the analysis for valuation purposes.
Without admitting or denying the findings, RBC agreed to cease and desist from committing or causing further violations and to pay $500,000 in disgorgement, $77,759 in interest, and a $2 million penalty. ■