CPI Aerostructures, Inc. Announces Settlement with SEC
CPI Aerostructures (NYSE American: CVU) announced a settlement with the SEC regarding restatements of financial statements from 2018 to 2022. The company agreed to a cease-and-desist order without admitting or denying the findings, and committed to remediating internal control weaknesses by December 31, 2024. Failure to comply will result in a $400,000 penalty by June 30, 2025. CPI Aero has already undertaken significant remedial actions, including revising its compliance program, hiring new personnel, and engaging a consultant. CEO Dorith Hakim remarked on the company’s commitment to improving financial reporting and compliance.
- Settlement with SEC removes uncertainty.
- Commitment to remediate internal control weaknesses by December 31, 2024.
- Implemented corrective measures and remedial actions.
- Revised Sarbanes-Oxley compliance program.
- Hired new personnel with expanded expertise in financial reporting.
- Engaged a consultant to assist with internal controls.
- Potential $400,000 penalty if compliance is not met by June 30, 2025.
- Previous restatements of financial statements indicate past financial inaccuracies.
CPI Aerostructures, Inc.'s settlement with the SEC is noteworthy in the context of compliance and financial governance. The SEC's cease-and-desist order relates to previous financial restatements between 2018 and 2022. The settlement highlights the importance of internal controls over financial reporting (ICFR) and disclosure controls and procedures (DCP). The fact that CPI Aero has undertaken significant remediation measures is promising. The hiring of new personnel and a consultant to improve their compliance programs should help restore investor confidence. However, the imposed penalty of
Short-term, this settlement might create some volatility in CPI Aero's stock as the market digests the news and evaluates the company’s commitment to improving its financial practices. Long-term, if the company successfully remediates its ICFR and DCP, it could result in stronger investor confidence and potentially a more stable stock price. Nonetheless, investors should be mindful of the risks associated with any potential future non-compliance.
The settlement with the SEC is a significant legal milestone for CPI Aerostructures, Inc. By agreeing to a cease-and-desist order and undertaking to rectify its ICFR and DCP, the company has avoided more severe penalties. The settlement terms demand transparency, as CPI Aero must publicly disclose its compliance status by the end of 2024. This requirement for public disclosure places a substantial burden on the company to ensure timely and thorough remediation of its controls.
From a legal perspective, the company’s proactive stance in hiring specialized personnel and a consultant demonstrates a strong commitment to compliance. This could mitigate any further regulatory scrutiny, provided they adhere to the stipulated conditions. Investors should note that while this settlement resolves past issues, the company's ability to meet future compliance deadlines will be important in maintaining its legal standing and avoiding further penalties.
For investors, CPI Aerostructures, Inc.'s news about settling with the SEC and the company's commitment to improve internal controls indicates a critical shift towards better financial transparency. This action can be seen as a positive step in rebuilding trust with the market. The announcement also suggests that management is taking serious measures to prevent similar issues, which might improve the company's reputation among shareholders and potential investors.
The market's reaction will likely be mixed initially, with some viewing the settlement as a necessary step toward future stability, while others may remain cautious until the company demonstrates full compliance. The success in effectively remediating ICFR and DCP will be important in shaping the long-term investor sentiment around CPI Aero. Continuous updates on progress will be key to maintaining investor confidence and stock price stability.
EDGEWOOD, N.Y., June 20, 2024 (GLOBE NEWSWIRE) -- CPI Aerostructures, Inc. (NYSE American: CVU) (“CPI Aero” or “Company”), today announced a settlement with the Securities and Exchange Commission (the “SEC” or “Commission”) related to the Company’s previously announced restatements of certain of its financial statements for fiscal periods between January 1, 2018 and December 31, 2022.
The Company, without admitting or denying the findings, agreed to a cease-and-desist order regarding Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, as amended, and Rules 12b-20, 13a-1, 13a-11, 13a-13, and 13a-15(a) thereunder. The SEC’s order can be found at https://www.sec.gov/files/litigation/admin/2024/34-100389.pdf.
The Company has undertaken to fully remediate its material weakness in internal control over financial reporting (“ICFR”) and have effective ICFR and disclosure controls and procedures (“DCP”) by December 31, 2024, to publicly disclose, concurrent with the filing of the Company’s 2024 Annual report on Form 10-K, whether in management’s opinion, the Company has fully remediated its material weaknesses in ICFR and has effective ICFR and DCP and to certify its compliance. If the Company fails to comply with these undertakings, a civil monetary penalty in the amount of
As part of the settlement, the Commission considered remedial acts promptly undertaken by the Company and cooperation afforded the Commission staff. Among other things, CPI Aero remediated all material weaknesses identified, revised its Sarbanes-Oxley compliance program, retained new personnel with expanded expertise in financial reporting, and hired a consultant to assist CPI Aero with its internal controls.
“We are pleased to announce that we have reached a settlement with the SEC. CPI Aero has diligently and fully cooperated with the SEC and demonstrated that implemented corrective measures and remedial actions have been effective. We have made significant progress and are committed to improving our policies, procedures, and internal controls over financial reporting, and ensuring compliance with the SEC agreement,” said Dorith Hakim, CEO of CPI Aero.
About CPI Aero: CPI Aero is a U.S. manufacturer of structural assemblies for fixed wing aircraft, helicopters and airborne Intelligence Surveillance and Reconnaissance pod systems in both the commercial aerospace and national security markets. Within the global aerostructure supply chain, CPI Aero is either a Tier 1 supplier to aircraft OEMs or a Tier 2 subcontractor to major Tier 1 manufacturers. CPI Aero also is a prime contractor to the U.S. Department of Defense, primarily the Air Force. In conjunction with its assembly operations, CPI Aero provides engineering, program management, supply chain management, and MRO services.
Forward-looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, included in this press release are forward-looking statements. The Company does not guarantee that it will actually achieve the plans, intentions or expectations disclosed in its forward-looking statements and you should not place undue reliance on the Company’s forward-looking statements.
Forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. There are a number of important factors that could cause the Company’s actual results to differ materially from those indicated or implied by its forward-looking statements, including those important factors set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2023 and subsequent reports filed with the Securities and Exchange Commission. Although the Company may elect to do so at some point in the future, the Company does not assume any obligation to update any forward-looking statements and it disclaims any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.
CPI Aero® is a registered trademark of CPI Aerostructures, Inc. For more information, visit www.cpiaero.com, and follow us on X (formally Twitter) @CPIAERO.
| Contacts: | |
| Investor Relations Counsel | CPI Aerostructures, Inc. |
| LHA Investor Relations | Andrew L. Davis |
| Jody Burfening | Chief Financial Officer |
| (212) 838-3777 | (631) 586-5200 |
| cpiaero@lhai.com | adavis@cpiaero.com |
| www.cpiaero.com |
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