SEC Charges Contracted Investor Relations Person with Disclosure Violation
Shawn Severson is the owner and manager of EnergyTech Investor, LLC. Between August 2015 and March 2018, UQM Technologies, Inc., or UQM, retained Severson, through EnergyTech Investor and another firm, to provide investor relations services and advice in exchange for a monthly fee. During this time, Severson provided various services to UQM that included, among other things, assisting with press releases, communicating with investors, and preparing written materials.
From December 2015 until April 2016, Severson published a series of newsletters about UQM. Severson posted these newsletters on EnergyTech Investor’s web site and distributed them through EnergyTech Investor’s social media accounts and email lists. Each of the newsletters contained several pages of positive content about UQM’s products, sales, and business prospects, as well as a full page of data concerning UQM’s stock performance, which prominently featured the phrase “consensus recommendation” followed with “buy” in bold text.
In the newsletters published during that time frame, Severson described EnergyTech Investor as an “independent research and publishing organization,” and included a disclosure that stated, “In some instances, we may be compensated by Companies mentioned in the report.” Severson failed to disclose that he was, in fact, being compensated by UQM, or the amount of his compensation. Of the compensation Severson received from UQM, $5,300 was attributable to his creation and distribution of these electronic newsletters.
In a settled enforcement action the SEC found Severson violated Section 17(b) of the Securities Act, which prohibits publishing, giving publicity to, or circulating “any notice, circular, advertisement . . . or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer . . . without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.”
Severson did not admit or deny the SEC findings in the related SEC order.
Contact Steve Quinlivan for more information.