According to the SEC, Revlon has agreed to pay an $850,000 penalty but neither admits nor denies the SEC's findings.
According to the SEC, Revlon engaged in "ring fencing," or creating informational barriers that deprived board members and shareholders of crucial financial knowledge. According to the SEC, in 2009, Revlon's controlling shareholder, MacAndrews and Forbes, asked the company to offer shareholders the option to exchange common shares for preferred shares. The exchanged shares would then be provided to M&F to pay down Revlon's debt. A third-party financial advisor evaluated the adequacy of the plan, but the company did not reveal to shareholders that the advisor deemed the deal inadequate, alleges the SEC.
Antonia Chion, the SEC's associate director of the division of enforcement, said in statement that a company's privatization efforts can "create opportunities for shareholder abuse and can have coercive effects on minority shareholders. By erecting informational barriers, Revlon kept critically important information from its board and, in turn, misled investors."