2024-09-25 SEC Press pdf 109 KB 19,055 chars

In re Sunbeam Management

Exhibit of SEC Levies More Than $3.8 Million in Penalties in Sweep of Late Beneficial Ownership and Insider Transaction Reports

Source PDF JSON

summary

paragraph

Sunbeam Management, LLC, a Maryland-based management and consulting firm, was accused of violating beneficial ownership reporting requirements under Sections 13(d) and 16(a) of the Exchange Act. The alleged fraud involved Sunbeam's failure to timely file a Schedule 13D and Form 3 after acquiring 43,675 shares of convertible preferred stock of OWC Pharmaceutical Research Corp., which represented 14.1% of outstanding OWC common stock. Sunbeam agreed to pay a $40,000 civil penalty in four installments over 360 days.

narrative

Sunbeam Management, LLC, a Maryland-based management and consulting firm, was found to have violated beneficial ownership reporting requirements under Sections 13(d) and 16(a) of the Exchange Act. The alleged fraud involved Sunbeam's failure to timely file a Schedule 13D and Form 3 after acquiring 43,675 shares of convertible preferred stock of OWC Pharmaceutical Research Corp., which represented 14.1% of outstanding OWC common stock. Sunbeam's failure to file these reports within the required 10-day window resulted in a nearly two-month delay, with the reports being submitted on May 11 and May 18, 2020. Additionally, Sunbeam failed to amend its Schedule 13D after OWC refused to convert the preferred shares due to insufficient authorized common stock, eliminating Sunbeam's beneficial ownership of the underlying shares. The SEC found these omissions to be clear violations of mandatory reporting rules, regardless of intent. As part of the resolution, Sunbeam agreed to pay a $40,000 civil penalty in four installments over 360 days, with strict payment terms and a prohibition on seeking a penalty offset in any related investor litigation. Sunbeam consented to a cease-and-desist order without admitting or denying the findings.

Enriched metadata

Scheme: non-corporate (95%)
Court: District of Columbia
Outcome: settled
Civil penalty: $40,000

Classified non-corporate(confidence 95%). No EDGAR filing fingerprint (criminal/DOJ-side scheme). detection rule →

Extracted insights

Dollar amounts 4

$40K $40,000 $10K–$100K
$15K $15,000 $10K–$100K
$10K $10,000 $10K–$100K
$5K $5,000 <$10K

Entities 2

company shares of convertible preferred stock of owc pharmaceutical research corp
agency the securities and exchange commission

Triples 10

The Securities and Exchange Commission deems appropriate that cease-and-desist proceedings be instituted
Respondent submitted an Offer of Settlement
Commission determined to accept the Offer of Settlement
Respondent consents to the entry of this Order
Commission finds proceedings arise out of violations of beneficial ownership reporting requirements
Respondent accepted shares of convertible preferred stock of OWC Pharmaceutical Research Corp
Respondent was deemed to be a beneficial owner of the underlying OWC common stock
Respondent did not file a Schedule 13D or a Form 3 until May 2020
Respondent violated Sections 13(d) and 16(a)
Respondent presented its convertible shares to OWC for conversion

PDF

In re Sunbeam Management · Source

Text layers

Extracted body text (19,055c)

UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934
Release No. 101176 / September 25, 2024

ADMINISTRATIVE PROCEEDING
File No. 3-22192

In the Matter of

Sunbeam Management, LLC

Respondent.

ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO
SECTION 21C OF THE SECURITIES
EXCHANGE ACT OF 1934, MAKING
FINDINGS, AND IMPOSING A CEASE-
AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities
Exchange Act of 1934 (“Exchange Act”), against Sunbeam Management, LLC (“Sunbeam” or
“Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the
purpose of these proceedings and any other proceedings brought by or on behalf of the
Commission, or to which the Commission is a party, and without admitting or denying the findings
herein, except as to the Commission’s jurisdiction over it and the subject matter of these
proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-
and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making
Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds
1
that:

Summary

1. These proceedings arise out of violations of the beneficial ownership reporting
requirements of the federal securities laws. Section 13(d) of the Exchange Act and Rule 13d-1
together require that any person who directly or indirectly acquires beneficial ownership of more
than five percent of any voting class of equity security registered under Section 12 of the Exchange
Act file a statement with the Commission. During the relevant time, beneficial owners could
comply with this requirement by filing a Schedule 13D with the Commission within 10 days after
acquiring the requisite amount of beneficial ownership. Whenever a material change occurred to
the facts set forth in any Schedule 13D so filed, the disclosure statement was required to have been
truthfully amended to reflect that material change and filed promptly.

2. Section 16(a) of the Exchange Act requires officers and directors of a company
with a registered class of equity security, and any beneficial owners of greater than 10% of such
class of equity security, to file certain reports of securities holdings and transactions. Enactment of
Section 16(a) was motivated by a belief that “the most potent weapon against the abuse of insider
information is full and prompt publicity” and by a desire “to give investors an idea of the purchases
and sales by insiders which may in turn indicate their private opinion as to prospects of the
company.”
2
The obligation to make Section 16 filings applies irrespective of profits or the filer’s
reasons for engaging in the transactions.

3. In March 2020, Respondent accepted shares of convertible preferred stock of OWC
Pharmaceutical Research Corp. (“OWC”) in satisfaction of a dispute. Each preferred share was
eligible to be converted into 1,000 shares of OWC common stock. As a result, Respondent was
deemed to be a beneficial owner of the underlying OWC common stock. When the amount of
beneficial ownership attributable to the convertible preferred stock was combined with a small
existing position in OWC common stock, Respondent beneficially owned more than 14% of OWC
outstanding shares. Respondent did not file a Schedule 13D or a Form 3 until May 2020. Thus,
Respondent violated Sections 13(d) and 16(a) and related rules.

4. Thereafter, Respondent presented its convertible shares to OWC for conversion.
However, OWC informed Respondent that it would not convert Respondent’s convertible shares
into common stock. As a result, Respondent no longer could be deemed to beneficially own the
underlying common stock. This decrease in the amount of beneficial ownership held represented a
material change to the facts set forth in its filed Schedule 13D. Respondent failed to amend that
Schedule 13D and thus violated Section 13(d)(2) and Rule 13d-2.

1
The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person
or entity in this or any other proceeding.

2
H.R. Rep. 73-1383, at 13, 24 (1934).

Respondent

5. Sunbeam is a Maryland corporation based in Pikesville, Maryland. Sunbeam is
primarily engaged in the business of management and consulting.

Legal Framework

6. Section 13(d)(1) of the Exchange Act and Rule 13d-1(a) thereunder together require
any person who has directly or indirectly acquired beneficial ownership of more than five percent of
any voting class of equity security registered under Section 12 of the Exchange Act to file a
statement with the Commission disclosing certain information specified in a Schedule 13D. During
the relevant time, individuals or entities could comply with this requirement by filing a Schedule
13D with the Commission within 10 days after they acquired the requisite amount of beneficial
ownership.
3
Section 13(d) allows shareholders and potential investors to evaluate changes in
substantial shareholdings.
4

7. During the time period relevant to this matter, Section 13(d)(2) of the Exchange Act
and Rule 13d-2(a) thereunder required a person who had filed a Schedule 13D to file an amendment
“promptly”
5
if any material change occurred in the facts set forth in that filing, including but not
limited to, any material increase or decrease in the percentage of the class beneficially owned. An
acquisition or disposition of beneficial ownership of securities in an amount equal to one percent or
more of a class of equity securities is deemed material by Rule 13d-2(a).

8. Section 16(a) of the Exchange Act and Rule 16a-3 apply to every officer, director,
and greater than 10% beneficial owner
6
of any class of equity security registered pursuant to

3
On October 10, 2023, the Commission adopted amendments to the rules governing beneficial ownership reporting
under Sections 13(d) and 13(g) to update and shorten certain filing deadlines (the “2023
Amendments”). Modernization of Beneficial Ownership Reporting, SEC Release No. 34-98704 (Oct. 10, 2023), 88
Fed. Reg. 76896 (Nov. 7, 2023). Among other provisions, the 2023 Amendments shortened the deadline for filing
the initial statement on Schedule 13D from 10 days to five business days, which became effective on February 5,
2024. Id. at 76897, 76906.

4
See generally GAF Corp. v. Milstein, 453 F.2d 709, 717 (2d Cir. 1971) cert. denied, 406 U.S. 910 (1972); see also
SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1167 (D.C. Cir. 1978) cert. denied, 440 U.S. 913 (1979), citing, S. Rep.
No. 550, 90th Cong., 1st Sess. 1 (1967) and H.R. Rep. No. 1711, 90th Cong., 2d Sess. 2 (1968) (“The purpose of
section 13(d) is to require disclosure of information by persons who have acquired a substantial interest, or increased
their interest in the equity securities of a company by a substantial amount, within a relatively short period of
time.”).

5
Although the term “promptly” was not defined under the rules in effect at the time of the violation, any delay in
filing beyond the date the filing reasonably could have been made may not have been prompt. Amendments to
Beneficial Ownership Reporting Requirements, SEC Rel. No. 34-39538, 1998 WL 7449, at *3 n.14 (Jan. 12, 1998).

6
For purposes of determining who is a greater than 10% beneficial owner required to report under Section 16(a),
Rule 16a-1(a)(1) incorporates the standards in Exchange Act Rule 13d-3, which specifies that a “beneficial owner”
includes any person who directly or indirectly has or shares voting or investment power, regardless of whether they
have any economic interest in the securities. More than one person may be a beneficial owner of the same securities.

Exchange Act Section 12 (collectively referred to herein as “insiders”). Pursuant to Rule 16a-3(a),
insiders are required to file initial statements of holdings on Form 3 and keep this information
current by reporting transactions on Forms 4 and 5. Specifically, Section 16(a)(2) of the Exchange
Act and Rule 16a-3 thereunder require that within 10 days after becoming an insider, or on or
before the effective date of the Section 12 registration of the class of equity security, an insider
must file a Form 3 report disclosing his or her beneficial ownership of all securities of the issuer.
These same provisions require that insiders also file Form 4 reports disclosing certain transactions
resulting in a change in beneficial ownership within two business days following the execution
date of the transaction. Pursuant to Rule 16a-3(g)(1), transactions required to be reported on Form
4 include purchases and sales of securities, exercises and conversions of derivative securities, and
grants or awards of securities from the issuer. In addition, according to Rule 16a-3(f)(1), insiders
are required to file a Form 5 report within 45 days after the issuer’s fiscal year-end to report any
transactions or holdings that should have been, but were not, reported on Form 3 or 4 (as
applicable) during the issuer’s most recent fiscal year and any transactions eligible for deferred
reporting (unless the corporate insider has previously reported all such transactions).

9. There is no state of mind requirement for violations of Sections 13(d) and 16(a) and
the rules thereunder.
7
The failure to timely file a required report, even if inadvertent, constitutes a
violation.
8

Facts

10. On March 23, 2020, Respondent acquired 43,675 shares of convertible preferred
stock of OWC. These shares were eligible to be converted into common stock at a ratio of 1,000
shares of common stock for each share of preferred stock. As a result, Respondent was deemed to
acquire beneficial ownership of 43,675,000 shares of common stock. At the time, Respondent
already owned an additional 500,000 shares of OWC common stock. Thus, in total, as of March
23, 2020, Respondent had beneficial ownership of 14.1% of outstanding OWC common stock.

11. On May 18, 2020, Respondent filed a Schedule 13D to report its beneficial
ownership position in OWC common stock. Respondent represented the date of event that
required filing (“Event Date”) of a Schedule 13D was March 23, 2020, which was the date it
acquired the OWC convertible preferred shares.

12. Respondent further reported that its ownership of the OWC preferred stock “carries
voting rights equivalent to 43,675,000 shares of Common Stock.” Respondent also represented

7
See, e.g., Savoy Indus., 587 F.2d at 1167 (“Indeed, the plain language of section 13(d)(1) gives no hint that
intentional conduct need be found, but rather, appears to place a simple and affirmative duty of reporting on certain
persons.”); SEC v. e-Smart Technologies, Inc., 82 F. Supp. 3d 97, 104 (D.D.C. 2015) (scienter is not required to
establish a violation of Section 16(a) of the Exchange Act).

8
Cf. Oppenheimer & Co., Inc., 47 SEC 286, 1980 WL 26901, at *1–2 (May 19, 1980) (Commission opinion) (“We
have previously held that the failure to make a required report, even though inadvertent, constitutes a willful
violation”); Herbert Moskowitz, 77 SEC 446, 2002 WL 434524, at *7 (Mar. 21, 2002) (Commission opinion)
(“evidence of both motive for non-disclosure and actual market impact ... is irrelevant” to whether violations of
Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder occurred).

that it “is deemed to be the beneficial owner” and it “has the sole power to vote or direct the vote,
and dispose or direct the disposition, of” 44,175,000 shares of OWC common stock.

13. Finally, Respondent attached a Form 8-K filed by OWC, which disclosed that the
preferred shares could be converted “provided that, at the time of conversion there were a
sufficient number of shares of authorized but unissued shares of common stock that were not
reserved for other purposes.” Respondent did not otherwise discuss the conditional nature of the
preferred shares or the likelihood of converting those shares, nor did it disclaim beneficial
ownership of the underlying common shares, as it was permitted to do pursuant to Rule 13d-4 of
Regulation 13D-G, due to the conversion contingency.

14. Respondent should have filed a Schedule 13D within 10 days of the Event Date.
As a result, the May 18, 2020 Schedule 13D was untimely.

15. On May 11, 2020, Respondent filed a Form 3 disclosing a position which included
43,675 shares of convertible preferred stock and 500,000 shares of common stock and an Event
Date of March 23, 2020. Finally, as to its “Relationship of Reporting Person(s) to Issuer,”
Respondent indicated it was a “10% Owner.”

16. Respondent’s Form 3 should have been filed within 10 days of the Event Date. As
a result, the May 11, 2020 Form 3 was untimely.

17. On May 20, 2020, two days after filing its Schedule 13D, through external counsel,
Respondent presented its notice to OWC to convert its shares of convertible preferred stock into
common stock. However, as noted, the preferred shares were only convertible if there were a
sufficient number of shares of authorized but unissued shares of common stock. Notwithstanding
Respondent’s right to convert its preferred stock into the underlying common, on June 9, 2020,
OWC responded to Respondent’s conversion notice, stating it would not convert Respondent’s
preferred shares because there were not enough outstanding OWC shares to satisfy the conversion.

18. As a result, Respondent no longer could be deemed the beneficial owner of the
common stock underlying the preferred shares. This decrease in the amount of beneficial
ownership represented a material change to the facts set forth in its filed Schedule 13D. Thus,
Respondent was required to file, but never filed, an amendment to its Schedule 13D.

19. Throughout the relevant time, Sunbeam consulted with counsel regarding its filing
obligations.

Violations

20. As a result of the conduct described above, Sunbeam violated Sections 13(d)(1),
13(d)(2), and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3 thereunder.

Cooperation

21. In determining to accept the Offer, the Commission considered cooperation
afforded to the Commission staff.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions
agreed to in Respondent Sunbeam’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Sunbeam Management,
LLC cease and desist from committing or causing any violations and any future violations of
Sections 13(d)(1), 13(d)(2), and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3
thereunder.

B. Respondent shall pay civil penalties of $40,000 to the Securities and Exchange
Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act
Section 21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31
U.S.C. § 3717. Payment shall be made in the following installments: $15,000 within 14 days of
the entry of the Order; $10,000 within 120 days of the entry of the Order; $10,000 within 240 days
of the entry of the Order, and $5,000, within 360 days of the entry of the Order. Payments shall be
applied first to post order interest, which accrues pursuant to 31 U.S.C. § 3717. Prior to making the
final payment set forth herein, Respondent shall contact the staff of the Commission for the amount
due. If Respondent fails to make any payment by the date agreed and/or in the amount agreed
according to the schedule set forth above, all outstanding payments under this Order, including
post-order interest, minus any payments made, shall become due and payable immediately at the
discretion of the staff of the Commission without further application to the Commission.

Payment must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which
will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United
States postal money order, made payable to the Securities and Exchange
Commission and hand-delivered or mailed to:

Enterprise Services Center
Accounts Receivable Branch
HQ Bldg., Room 181, AMZ-341
6500 South MacArthur Boulevard
Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying
Sunbeam as a Respondent in these proceedings, and the file number of these proceedings; a copy
of the cover letter and check or money order must be sent to D. Mark Cave, Associate Director,
Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC
20549.

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be
treated as penalties paid to the government for all purposes, including all tax purposes. To
preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor
Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any
award of compensatory damages by the amount of any part of Respondent’s payment of a civil
penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a
Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting
the Penalty Offset, notify the Commission's counsel in this action, and pay the amount of the
Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be deemed
an additional civil penalty and shall not be deemed to change the amount of the civil penalty
imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a
private damages action brought against Respondent by or on behalf of one or more investors based
on substantially the same facts as alleged in the Order instituted by the Commission in this
proceeding.

By the Commission.

Vanessa A. Countryman
Secretary

OCR text (19,424c · tika · 95% conf)

UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 101176 / September 25, 2024

ADMINISTRATIVE PROCEEDING

File No. 3-22192

In the Matter of

Sunbeam Management, LLC

Respondent.

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO

SECTION 21C OF THE SECURITIES

EXCHANGE ACT OF 1934, MAKING

FINDINGS, AND IMPOSING A CEASE-

AND-DESIST ORDER

The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities

Exchange Act of 1934 (“Exchange Act”), against Sunbeam Management, LLC (“Sunbeam” or

“Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the

purpose of these proceedings and any other proceedings brought by or on behalf of the

Commission, or to which the Commission is a party, and without admitting or denying the findings

herein, except as to the Commission’s jurisdiction over it and the subject matter of these

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting Cease-

and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making

Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

Summary

1. These proceedings arise out of violations of the beneficial ownership reporting

requirements of the federal securities laws. Section 13(d) of the Exchange Act and Rule 13d-1

together require that any person who directly or indirectly acquires beneficial ownership of more

than five percent of any voting class of equity security registered under Section 12 of the Exchange

Act file a statement with the Commission. During the relevant time, beneficial owners could

comply with this requirement by filing a Schedule 13D with the Commission within 10 days after

acquiring the requisite amount of beneficial ownership. Whenever a material change occurred to

the facts set forth in any Schedule 13D so filed, the disclosure statement was required to have been

truthfully amended to reflect that material change and filed promptly.

2. Section 16(a) of the Exchange Act requires officers and directors of a company

with a registered class of equity security, and any beneficial owners of greater than 10% of such

class of equity security, to file certain reports of securities holdings and transactions. Enactment of

Section 16(a) was motivated by a belief that “the most potent weapon against the abuse of insider

information is full and prompt publicity” and by a desire “to give investors an idea of the purchases

and sales by insiders which may in turn indicate their private opinion as to prospects of the

company.”2 The obligation to make Section 16 filings applies irrespective of profits or the filer’s

reasons for engaging in the transactions.

3. In March 2020, Respondent accepted shares of convertible preferred stock of OWC

Pharmaceutical Research Corp. (“OWC”) in satisfaction of a dispute. Each preferred share was

eligible to be converted into 1,000 shares of OWC common stock. As a result, Respondent was

deemed to be a beneficial owner of the underlying OWC common stock. When the amount of

beneficial ownership attributable to the convertible preferred stock was combined with a small

existing position in OWC common stock, Respondent beneficially owned more than 14% of OWC

outstanding shares. Respondent did not file a Schedule 13D or a Form 3 until May 2020. Thus,

Respondent violated Sections 13(d) and 16(a) and related rules.

4. Thereafter, Respondent presented its convertible shares to OWC for conversion.

However, OWC informed Respondent that it would not convert Respondent’s convertible shares

into common stock. As a result, Respondent no longer could be deemed to beneficially own the

underlying common stock. This decrease in the amount of beneficial ownership held represented a

material change to the facts set forth in its filed Schedule 13D. Respondent failed to amend that

Schedule 13D and thus violated Section 13(d)(2) and Rule 13d-2.

1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on any other person

or entity in this or any other proceeding.

2 H.R. Rep. 73-1383, at 13, 24 (1934).

Respondent

5. Sunbeam is a Maryland corporation based in Pikesville, Maryland. Sunbeam is

primarily engaged in the business of management and consulting.

Legal Framework

6. Section 13(d)(1) of the Exchange Act and Rule 13d-1(a) thereunder together require

any person who has directly or indirectly acquired beneficial ownership of more than five percent of

any voting class of equity security registered under Section 12 of the Exchange Act to file a

statement with the Commission disclosing certain information specified in a Schedule 13D. During

the relevant time, individuals or entities could comply with this requirement by filing a Schedule

13D with the Commission within 10 days after they acquired the requisite amount of beneficial

ownership.3 Section 13(d) allows shareholders and potential investors to evaluate changes in

substantial shareholdings.4

7. During the time period relevant to this matter, Section 13(d)(2) of the Exchange Act

and Rule 13d-2(a) thereunder required a person who had filed a Schedule 13D to file an amendment

“promptly”5 if any material change occurred in the facts set forth in that filing, including but not

limited to, any material increase or decrease in the percentage of the class beneficially owned. An

acquisition or disposition of beneficial ownership of securities in an amount equal to one percent or

more of a class of equity securities is deemed material by Rule 13d-2(a).

8. Section 16(a) of the Exchange Act and Rule 16a-3 apply to every officer, director,

and greater than 10% beneficial owner6 of any class of equity security registered pursuant to

3 On October 10, 2023, the Commission adopted amendments to the rules governing beneficial ownership reporting

under Sections 13(d) and 13(g) to update and shorten certain filing deadlines (the “2023

Amendments”). Modernization of Beneficial Ownership Reporting, SEC Release No. 34-98704 (Oct. 10, 2023), 88

Fed. Reg. 76896 (Nov. 7, 2023). Among other provisions, the 2023 Amendments shortened the deadline for filing

the initial statement on Schedule 13D from 10 days to five business days, which became effective on February 5,

2024. Id. at 76897, 76906.

4 See generally GAF Corp. v. Milstein, 453 F.2d 709, 717 (2d Cir. 1971) cert. denied, 406 U.S. 910 (1972); see also

SEC v. Savoy Indus., Inc., 587 F.2d 1149, 1167 (D.C. Cir. 1978) cert. denied, 440 U.S. 913 (1979), citing, S. Rep.

No. 550, 90th Cong., 1st Sess. 1 (1967) and H.R. Rep. No. 1711, 90th Cong., 2d Sess. 2 (1968) (“The purpose of

section 13(d) is to require disclosure of information by persons who have acquired a substantial interest, or increased

their interest in the equity securities of a company by a substantial amount, within a relatively short period of

time.”).

5 Although the term “promptly” was not defined under the rules in effect at the time of the violation, any delay in

filing beyond the date the filing reasonably could have been made may not have been prompt. Amendments to

Beneficial Ownership Reporting Requirements, SEC Rel. No. 34-39538, 1998 WL 7449, at *3 n.14 (Jan. 12, 1998).

6 For purposes of determining who is a greater than 10% beneficial owner required to report under Section 16(a),

Rule 16a-1(a)(1) incorporates the standards in Exchange Act Rule 13d-3, which specifies that a “beneficial owner”

includes any person who directly or indirectly has or shares voting or investment power, regardless of whether they

have any economic interest in the securities. More than one person may be a beneficial owner of the same securities.

Exchange Act Section 12 (collectively referred to herein as “insiders”). Pursuant to Rule 16a-3(a),

insiders are required to file initial statements of holdings on Form 3 and keep this information

current by reporting transactions on Forms 4 and 5. Specifically, Section 16(a)(2) of the Exchange

Act and Rule 16a-3 thereunder require that within 10 days after becoming an insider, or on or

before the effective date of the Section 12 registration of the class of equity security, an insider

must file a Form 3 report disclosing his or her beneficial ownership of all securities of the issuer.

These same provisions require that insiders also file Form 4 reports disclosing certain transactions

resulting in a change in beneficial ownership within two business days following the execution

date of the transaction. Pursuant to Rule 16a-3(g)(1), transactions required to be reported on Form

4 include purchases and sales of securities, exercises and conversions of derivative securities, and

grants or awards of securities from the issuer. In addition, according to Rule 16a-3(f)(1), insiders

are required to file a Form 5 report within 45 days after the issuer’s fiscal year-end to report any

transactions or holdings that should have been, but were not, reported on Form 3 or 4 (as

applicable) during the issuer’s most recent fiscal year and any transactions eligible for deferred

reporting (unless the corporate insider has previously reported all such transactions).

9. There is no state of mind requirement for violations of Sections 13(d) and 16(a) and

the rules thereunder.7 The failure to timely file a required report, even if inadvertent, constitutes a

violation.8

Facts

10. On March 23, 2020, Respondent acquired 43,675 shares of convertible preferred

stock of OWC. These shares were eligible to be converted into common stock at a ratio of 1,000

shares of common stock for each share of preferred stock. As a result, Respondent was deemed to

acquire beneficial ownership of 43,675,000 shares of common stock. At the time, Respondent

already owned an additional 500,000 shares of OWC common stock. Thus, in total, as of March

23, 2020, Respondent had beneficial ownership of 14.1% of outstanding OWC common stock.

11. On May 18, 2020, Respondent filed a Schedule 13D to report its beneficial

ownership position in OWC common stock. Respondent represented the date of event that

required filing (“Event Date”) of a Schedule 13D was March 23, 2020, which was the date it

acquired the OWC convertible preferred shares.

12. Respondent further reported that its ownership of the OWC preferred stock “carries

voting rights equivalent to 43,675,000 shares of Common Stock.” Respondent also represented

7 See, e.g., Savoy Indus., 587 F.2d at 1167 (“Indeed, the plain language of section 13(d)(1) gives no hint that

intentional conduct need be found, but rather, appears to place a simple and affirmative duty of reporting on certain

persons.”); SEC v. e-Smart Technologies, Inc., 82 F. Supp. 3d 97, 104 (D.D.C. 2015) (scienter is not required to

establish a violation of Section 16(a) of the Exchange Act).

8 Cf. Oppenheimer & Co., Inc., 47 SEC 286, 1980 WL 26901, at *1–2 (May 19, 1980) (Commission opinion) (“We

have previously held that the failure to make a required report, even though inadvertent, constitutes a willful

violation”); Herbert Moskowitz, 77 SEC 446, 2002 WL 434524, at *7 (Mar. 21, 2002) (Commission opinion)

(“evidence of both motive for non-disclosure and actual market impact … is irrelevant” to whether violations of

Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 thereunder occurred).

that it “is deemed to be the beneficial owner” and it “has the sole power to vote or direct the vote,

and dispose or direct the disposition, of” 44,175,000 shares of OWC common stock.

13. Finally, Respondent attached a Form 8-K filed by OWC, which disclosed that the

preferred shares could be converted “provided that, at the time of conversion there were a

sufficient number of shares of authorized but unissued shares of common stock that were not

reserved for other purposes.” Respondent did not otherwise discuss the conditional nature of the

preferred shares or the likelihood of converting those shares, nor did it disclaim beneficial

ownership of the underlying common shares, as it was permitted to do pursuant to Rule 13d-4 of

Regulation 13D-G, due to the conversion contingency.

14. Respondent should have filed a Schedule 13D within 10 days of the Event Date.

As a result, the May 18, 2020 Schedule 13D was untimely.

15. On May 11, 2020, Respondent filed a Form 3 disclosing a position which included

43,675 shares of convertible preferred stock and 500,000 shares of common stock and an Event

Date of March 23, 2020. Finally, as to its “Relationship of Reporting Person(s) to Issuer,”

Respondent indicated it was a “10% Owner.”

16. Respondent’s Form 3 should have been filed within 10 days of the Event Date. As

a result, the May 11, 2020 Form 3 was untimely.

17. On May 20, 2020, two days after filing its Schedule 13D, through external counsel,

Respondent presented its notice to OWC to convert its shares of convertible preferred stock into

common stock. However, as noted, the preferred shares were only convertible if there were a

sufficient number of shares of authorized but unissued shares of common stock. Notwithstanding

Respondent’s right to convert its preferred stock into the underlying common, on June 9, 2020,

OWC responded to Respondent’s conversion notice, stating it would not convert Respondent’s

preferred shares because there were not enough outstanding OWC shares to satisfy the conversion.

18. As a result, Respondent no longer could be deemed the beneficial owner of the

common stock underlying the preferred shares. This decrease in the amount of beneficial

ownership represented a material change to the facts set forth in its filed Schedule 13D. Thus,

Respondent was required to file, but never filed, an amendment to its Schedule 13D.

19. Throughout the relevant time, Sunbeam consulted with counsel regarding its filing

obligations.

Violations

20. As a result of the conduct described above, Sunbeam violated Sections 13(d)(1),

13(d)(2), and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3 thereunder.

Cooperation

21. In determining to accept the Offer, the Commission considered cooperation

afforded to the Commission staff.

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions

agreed to in Respondent Sunbeam’s Offer.

Accordingly, it is hereby ORDERED that:

A. Pursuant to Section 21C of the Exchange Act, Respondent Sunbeam Management,

LLC cease and desist from committing or causing any violations and any future violations of

Sections 13(d)(1), 13(d)(2), and 16(a) of the Exchange Act and Rules 13d-1, 13d-2, and 16a-3

thereunder.

B. Respondent shall pay civil penalties of $40,000 to the Securities and Exchange

Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act

Section 21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31

U.S.C. § 3717. Payment shall be made in the following installments: $15,000 within 14 days of

the entry of the Order; $10,000 within 120 days of the entry of the Order; $10,000 within 240 days

of the entry of the Order, and $5,000, within 360 days of the entry of the Order. Payments shall be

applied first to post order interest, which accrues pursuant to 31 U.S.C. § 3717. Prior to making the

final payment set forth herein, Respondent shall contact the staff of the Commission for the amount

due. If Respondent fails to make any payment by the date agreed and/or in the amount agreed

according to the schedule set forth above, all outstanding payments under this Order, including

post-order interest, minus any payments made, shall become due and payable immediately at the

discretion of the staff of the Commission without further application to the Commission.

Payment must be made in one of the following ways:

(1) Respondent may transmit payment electronically to the Commission, which

will provide detailed ACH transfer/Fedwire instructions upon request;

(2) Respondent may make direct payment from a bank account via Pay.gov

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United

States postal money order, made payable to the Securities and Exchange

Commission and hand-delivered or mailed to:

http://www.sec.gov/about/offices/ofm.htm

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying

Sunbeam as a Respondent in these proceedings, and the file number of these proceedings; a copy

of the cover letter and check or money order must be sent to D. Mark Cave, Associate Director,

Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC

20549.

C. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be

treated as penalties paid to the government for all purposes, including all tax purposes. To

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any

award of compensatory damages by the amount of any part of Respondent’s payment of a civil

penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting

the Penalty Offset, notify the Commission's counsel in this action, and pay the amount of the

Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be deemed

an additional civil penalty and shall not be deemed to change the amount of the civil penalty

imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a

private damages action brought against Respondent by or on behalf of one or more investors based

on substantially the same facts as alleged in the Order instituted by the Commission in this

proceeding.

By the Commission.

Vanessa A. Countryman

Secretary

UNITED STATES OF AMERICA
IV.