Business ProfileforApex Global Brands

The following describes a government action that has been resolved by either a settlement or a decision by a court or administrative agency. If the matter is being appealed, it will be noted below.

December 17, 2020 - The Securities and Exchange Commission today announced settled charges against apparel brand company Apex Global Brands Inc., headquartered in Sherman Oaks, California, for materially misstating its financial statements relating to its primary asset and only revenue source. The SEC also settled charges against Apex's former CFO, Jason Boling, for causing Apex's books and records violations.

The SEC's orders find that from at least January 2017 to April 2018, a time period during which Apex's trademarks provided its sole source of revenue, Apex materially overstated its financial statements by failing to timely recognize impairments of three of its trademarks. According to the orders, Apex failed to perform adequate impairment assessments of its trademarks while it was experiencing a series of significant setbacks in its business and industry environment.

As set forth in the order, Apex was permitted to first perform a qualitative assessment to determine whether it was necessary to perform a quantitative impairment test. The SEC's order finds that Apex performed only limited qualitative impairment assessments that failed to appropriately take into account negative information indicating that the trademarks were more likely than not impaired, including the loss of major trademark licensing arrangements. The SEC's order also finds that Apex became aware as early as August 2016 that the values of certain of Apex's trademarks were more likely than not materially lower than the carrying values on Apex's books. The order finds that, by January 2017, information available to Apex indicated a quantitative assessment of value of Apex's trademarks was required, yet Apex did not perform a quantitative assessment at this time. In April 2018, Apex announced that it impaired the three trademarks for its fiscal year ended February 3, 2018, for a total of $34.5 million.

According to the SEC's order against Jason Boling, Apex's CFO from March 2013 to December 2017, Boling oversaw Apex's impairment assessments of trademarks. Boling was aware during this period of the information indicating that certain of Apex's trademarks were more likely than not impaired and, as a consequence, should have known that Apex's books and records did not accurately reflect the value of those trademarks.

The SEC's order against Apex finds that it violated the antifraud provisions of Sections 17(a)(2) and (3) of the Securities Act of 1933 and the reporting provisions of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. Without admitting or denying the allegations, Apex agreed to cease and desist from future violations of these provisions. In determining to accept Apex's offer of settlement, the Commission considered Apex's current financial condition. The SEC's order against Boling finds that he caused Apex's violations of Section 13(b)(2)(A) of the Exchange Act. Without admitting or denying the allegations, Boling agreed to cease and desist from future violations of this provision and to pay a penalty of $10,000.

The SEC's investigation was conducted by Michael Hoess and Eugene Bull, under the supervision of Laura B. Josephs and Carolyn Welshhans.