Plastics industry executive Alfred Teo, Sr., and a trust he controlled were charged with lying in SEC filings regarding his ownership of Musicland Stores Corporation stock.  A federal judge ordered the defendants to pay $49.5 million. SEC Rules re: Those Owning >5% of a Voting Class of Publicly Traded Stock. When a person or group of people acquires beneficial ownership of more than 5% of a voting class of a company’s publicly traded stock, they're required to file a Schedule 13D with the SEC.  Teo, who is chairman of several private companies that are some of the largest producers of plastic bags in North America, was charged by the SEC in 2004 with filing false and misleading 13D forms and failing to make other required filings from 1998 to 2001.   He and the trust thereby materially misrepresented their ownership of Musicland stock. A jury found Teo liable for securities fraud and disclosure violations, following a 10-day trial.  The MAAA Trust controlled by Teo was found liable for disclosure violations.  U.S. District Court Judge Susan Wigenton issued the final judgment. Lied To Avoid Triggering Poison Pill. The SEC introduced evidence at the trial showing that Teo lied in SEC filings about the amount of shares he controlled in order to avoid triggering Musicland’s shareholders rights plan or “poison pill.”  Teo understood that triggering the poison pill would have significantly diluted his stock and caused massive losses to him.  Teo deceptively had purchased millions of Musicland shares - well above the poison pill threshold, which he eventually sold to receive illicit profits. SEC Staff Credits. Investigation by Gerald Gross.  Litigation by David Stoelting, Tracy Sivitz, Katherine Brownstein, John Murray, Elizabeth Reilly, Sandra Yanez of the NYRO. For further details, go to:   [SEC PR 11-275, 12/22/11] and [SEC Litigation Rel. 22209, 12/22/11]