The SEC initiated cease-and-desist proceedings against American Electric Power Company, Inc. (AEP) for misleading statements, lack of disclosure of related party transactions, and insufficient internal controls. The case stems from AEP's funding and control of Empowering Ohio, a 501(c)(4) organization that contributed funds to political groups tied to a bribery scheme involving Ohio House Speaker Larry Householder. AEP’s public statements in 2020, after Householder’s arrest, falsely claimed no contributions were made to Generation Now, a 501(c)(4) linked to the scheme, despite Empowering Ohio’s funding being directed by AEP employees. The company also failed to disclose $700,000 in related party payments in its 2019 Form 10-K and lacked sufficient internal accounting controls.

The SEC found AEP violated multiple provisions of the Securities Act and the Exchange Act, including making misleading statements, failing to maintain accurate records, and lacking internal controls for related party transactions. AEP agreed to a $19 million civil penalty and undertook to assist the SEC in distributing funds to affected investors. The penalty will be deposited into a Fair Fund created under the Sarbanes-Oxley Act, and AEP committed to avoiding offsetting this penalty against potential damages in related private investor lawsuits. This enforcement action underscores the importance of transparency and robust internal controls in corporate financial reporting and governance.