New York-based investment adviser HG Vora Capital Management agreed to pay $950,000 to settle charges levied by the Securities and Exchange Commission (SEC) alleging failure to report beneficial ownership regarding its stake at trucking transport company Ryder System.

The firm agreed to cease and desist from further violations in reaching settlement, the SEC announced in a press release Friday.

HG Vora failed to make timely ownership disclosures in the lead up to its May 2022 acquisition bid for Ryder, the agency alleged.

The details: Federal securities laws require public companies to disclose to the SEC certain stock ownership stakes, including positions of more than 5 percent and if the company has a control purpose.

In February 2022, HG Vora disclosed it had a 5.6 percent stake in Ryder stock and certified it did not have a control purpose, according to the SEC’s order. By late April 2022, the firm had built its stake up to 9.9 percent and formed a control purpose but failed to disclose its position until mid-May, the SEC alleged.

On the day it reported its position late, the firm proposed in a letter to Ryder to buy all common stock for $86 a share. Before sending the letter, and after forming a control purpose, HG Vora had purchased swap agreements that gave it additional exposure related to the transport company’s stock. After HG Vora’s public announcement of its bid, Ryder’s stock price increased.

“The federal laws and SEC rules covering ownership disclosure help keep investors fully informed about control—and potential changes in control—of publicly traded companies,” said Mark Cave, associate director of the SEC’s Division of Enforcement, in the release. “… HG Vora deprived Ryder shareholders of information about its significant stake in the company while building a large swaps position from which it stood to profit after announcing the Ryder takeover bid.”

Compliance considerations: In October, the SEC adopted shorter reporting deadlines for beneficial ownership from 10 days to five days.

HG Vora did not respond to a request for comment. The firm agreed to settle without admitting or denying the SEC’s findings.

Jeff Dale is Managing Editor, Editorial Projects and Analytics, at Compliance Week. He previously served as Compliance Week's Digital Editor and has worked as a copy editor at the Boston Herald and city editor at The Hour Publishing Co. in Norwalk, Conn.View full Profile

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