The SEC has charged the former IRO of an Arizona-based solar energy company with violating fair disclosure rules and fined him $50,000 after he alerted select analysts and investors about an upcoming press release.
An SEC investigation concludes that Lawrence Polizzotto, a former vice president at First Solar, told analysts and investors in a series of phone conversations that his company was not likely to receive a loan guarantee from the US government. When the company disclosed the information in a press release the next day, its stock dropped by 6 percent.
‘Polizzotto offered previously undisclosed information to select analysts and institutional investors and left the rest of First Solar’s investors in the dark,’ says Michele Layne, director of the SEC’s Los Angeles office, in a news release. ‘All investors, regardless of their size or relationship with the company, are entitled to the same information at the same time.’
The SEC says Polizzotto went to an investor conference in 2011 with the then-CEO who said he was confident the company would receive a total of $4.5 bn in three separate loan guarantees. Polizzotto, along with other executives of the company, then learned the company would not receive at least one of the guarantees, and he and other company employees began discussing the loss of the guarantee and how and when the company should disclose the information.
The SEC says Polizzotto violated the disclosure restriction with 20 sell-side analysts and institutional investors in a single day.
‘Polizzotto drafted several talking points that effectively signaled First Solar would not receive one of the three loan guarantees,’ the SEC says. ‘He delivered his talking points in the one-on-one calls with analysts and institutional investors, and he directed a subordinate to do the same. Polizzotto went even further than his talking points when he told at least one analyst and one institutional investor that if they wanted to be conservative, they should assume First Solar would not receive one of the loan guarantees.’
Polizzotto agreed to the settlement without admitting guilt. First Solar was not charged or fined, as the SEC found it ‘immediately discovered Polizzotto’s selective disclosure and promptly issued a press release the next morning before the market opened. First Solar then quickly self-reported the misconduct to the SEC.’
