Revlon fined $850,000 by SEC, accused of misleading investors
Cosmetics giant Revlon Inc. is facing a $850,000 fine from the Securities and Exchange Commission, which alleges the company misled investors as it tried to tackle its debt.
Without admitting or denying fault, the New York company agreed to settle federal government charges accusing it of withholding information during a going-private transaction with its controlling shareholder, MacAndrews & Forbes Holdings Inc.
M&F, which owns more than three quarters of Revlon’s shares and is led by billionaire Ronald Perelman, asked the company in 2009 to allow minority shareholders to swap their common shares for preferred stock.
M&F planned to then use the shares to pay down the cosmetics company’s debt, according to the government.
But an independent financial adviser brought on by the trustee overseeing Revlon’s retirement plan deemed the proposed deal to be unfair to investors, according to the SEC.
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The company tried to hide the prognosis from 401(k) participants and independent board members, and instead presented the M&F offer as fair, according to regulators.
Revlon could not immediately be reached for comment.
“Going-private transactions create opportunities for shareholder abuse and can have coercive effects on minority shareholders,” said Antonia Chion, associate director in the SEC’s Division of Enforcement, in a statement. “By erecting informational barriers, Revlon kept critically important information from its board and, in turn, misled investors.”
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