An SEC Case Study of Manitex International, Inc. Securities Fraud Using “Bill and Hold” Sales to a Related Party to Overstate Revenue

This is a case study of In the Matter of Manitex International, Inc., an administrative cease-and-desist proceeding conducted by the U.S. Securities and Exchange Commission (SEC) on September 29, 2020. The specific issues covered in this case include (a) the elements of several types of securities fraud according to U.S. federal law; (b) how corporate officers of Manitex carried out two fraud schemes over several years resulting in the pilferage of inventory and the use of “bill and hold”(b&h) sales to overstate revenue; (c) what is meant by a b&h sale; (d) the legal requirements which would justify the inclusion of b&h sales in the revenue of a company; (e) why a b&h sale to a related party deserves special scrutiny; (f) the legal duty of corporate officers of an issuer to maintain a system of effective financial reporting and internal accounting controls; (f) whether corporate officer defendants are required to have accounting expertise to be held liable for securities fraud; (g) whether a restatement of financial statements is ample justification for disgorgement of a corporate officer’s bonus; and (h) implications for auditors emanating from this case.