In the Matter of Revlon, Inc., Admin. Proc. No. 3-15356.  On June 13, 2013, the SEC announced it filed settled administrative charges against Revlon for misleading shareholders in connection with a “going private transaction.”  A going private transaction is essentially one in which a company buys out the shareholders and deregisters the stock so that the company or a private equity firm can obtain all the outstanding shares. According to the SEC’s Order instituting settled administrative proceedings, controlling shareholder MacAndrews and Forbes (“M&F”) asked Revlon to offer minority shareholders the opportunity to exchange common stock for preferred stock.  The exchanged shares would then go to M&F to pay down Revlon’s debt.  According to the Order, the trustee overseeing the company’s 401(k) plan decided that plan members could exchange shares only if a third-party financial adviser determined that the value of the preferred stock plan members would get was at least equal to the value of the common
stock being exchanged.  The financial adviser found that the consideration offered in the transaction was not sufficient to allow the 401(k) plan members to exchange their shares.  The SEC’s order finds that Revlon did not want to disclose the financial adviser’s determination.  To avoid a disclosing the financial adviser’s findings, Revlon amended the 401(k) trust agreement so that the trustee would not share the information.  Further, the
company deliberately refrained from being involved with the engagement letter firing the financial adviser, and it told the trustee to advise 401(k) members of his decision not to allow the exchange without mentioning the financial adviser’s findings, among other things.  As a result, the SEC’s Order finds that shareholders were misled about
the transaction.  Without admitting or denying the findings, Revlon consented to entry of the SEC Oder finding that the company violated Section 13(e) of the Exchange Act and Exchange Act Rule 13e-3(b)(1)(iii).  The Order requires Revlon to cease and desist from committing or causing future violations and to pay a civil monetary penalty of $850,000.