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Securities and Exchange Commission v. Charles H. Merchant, Sr. and Southern USA Resources, Inc., Civil Action No. 1:13-cv-3879-SCJ (N.D. Ga.)
SEC Charges Alabama Based Defendants with Securities Fraud and Reporting Violations
Recently, the Securities and Exchange Commission filed an action in federal court in the Northern District of Georgia, charging Charles H. Merchant, Sr. (Merchant), an Anniston, Alabama resident, and his company Southern USA Resources, Inc. (Southern USA), a Delaware corporation based in Ashland, Alabama, with violations of the antifraud provisions and various reporting violation of the federal securities laws.
The complaint alleges that in 2012, Southern USA, a company purportedly focused on the exploitation of gold mining rights in Alabama, and Merchant, the company’s CEO, CFO, president, secretary, treasurer and director, filed materially false reports with the Commission that misrepresented the value of the company’s land. During 2012, Merchant also filed with the Commission certifications that contained false statements about the company’s internal controls and his understanding of those controls. Southern USA is currently delinquent with respect to its 2012 Form 10-K and its two most recent Forms 10-Q. Defendant Merchant has resigned his CEO and CFO positions with no successors named, and the company’s outside auditor also has resigned – none of which has been disclosed by Southern USA in a Form 8-K.
The complaint alleges that Merchant by virtue of his conduct, directly or indirectly, has engaged in and unless enjoined, will engage in violations of Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13a-14 and 13b2-1 thereunder. Further, Merchant also aided and abetted defendant Southern USA’s violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder; and is liable as a “control person” under Section 20(a) of the Exchange Act for defendant Southern USA’s violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act, and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.
The complaint further alleges that Southern USA by virtue of its conduct, directly or indirectly, has engaged in and unless enjoined, will engage in violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5, 13a-1, 13a-11, 13a-13, and 13a-15 thereunder.
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