On September 24, 2009, the SEC filed a settled civil action against Christopher A. Black, the former CFO of American Commercial Lines, Inc., for allegedly aiding and abetting ACL’s violation of Regulation FD. The complaint alleged that on June 11, 2007, ACL issued a press release projecting second quarter earnings in line with ACL’s first quarter earnings of approximately $.20 per share. Five days later, however, on Saturday, June 16, Black allegedly sent an e-mail from his home to the eight sell-side analysts who covered the company stating that ACL’s earnings per share for the second quarter “will likely be in the neighborhood of about a dime below that of the first quarter,” effectively cutting in half ACL’s second quarter earnings guidance.
The SEC alleges that the resulting analysts’ reports triggered a nearly 10% drop in ACL’s stock price on Monday, June 18, the first trading day after Black’s e-mail to analysts. Black agreed to settle the case by paying a $25,000 penalty.
THe SEC did not bring an enforcement action against ACL, however, noting in its litigation release that prior to the violation, ACL cultivated an environment of compliance by providing training regarding the requirements of Regulation FD and by adopting policies that implemented controls to prevent violations. Moreover, the SEC stated that once the illegal disclosure was discovered by ACL, it promptly and publicly disclosed the information by filing a Form 8-K with the Commission the same day, and self-reported the violation to the SEC the day after it was discovered.
