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RCI Hospitality Announces Settlement Of SEC Investigation On Disclosure Failures

RCI Hospitality Holdings Inc. (RICK) announced the settlement by the company, chief executive officer Eric Langan, and former chief financial officer Phillip Marshall of a civil administrative proceeding with the SEC and the conclusion of SEC investigation. Former independent board member Steven Jenkins, a Texas-licensed accountant, has also agreed to settle charges concerning his failure to disclose his personal bankruptcy history.

As part of the settlement, the company agreed to a civil penalty in the amount of $400,000, and Langan and Marshall agreed to civil penalties in the amount of $200,000 and $35,000, respectively.

The SEC's order found that, from fiscal year 2014 through 2019, RCI failed to disclose a total of $615,000 in executive compensation in the form of perquisites.

In addition, the order found that RCI failed to disclose related party transactions involving Langan's father and brother and a director's brother.

The order also found that RCI failed to keep books and records that allowed it to report, and lacked sufficient internal controls concerning, these executive perquisites and related party transactions.

Separately, the SEC also reached a settlement with Steve Jenkins, a former member of RCI's board of directors. He failed to disclose to the company that he filed two personal federal bankruptcy petitions.

The order further found that the company was required to disclose in its proxy statements if an officer or director had filed for personal bankruptcy within the past ten years.

Jenkins has agreed, without admitting or denying the SEC's findings, to a cease-and-desist order and to pay a $30,000 civil penalty. Jenkins has further agreed to be suspended from appearing or practicing before the SEC as an accountant, with the right to apply for reinstatement after three years.

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