The SEC’s Cross-Border Security Swap Rules

Securities Lawyer 101

The Securities and Exchange Commission (the “SEC”) adopted the first of a series of rules and guidance on cross-border security-based swap activities for market participants.

The SEC will use the new rules to finalizing the remaining proposals.

Securities Lawyers Gone Wild l Three-Time Felon & Lawyer Indicted

On

April 6, 2014, Texas attorney Richard Plato was  indicted  for mail fraud and securities fraud.

Plato is a disbarred attorney who has been convicted in three separate criminal cases, including money laundering and wire fraud in the collapse of a large Florida insurer.  

The indictment of Plato by a Texas grand jury is for seven counts of mail fraud and two counts of securities fraud. Richard Plato, the owner of Momentum Production Corp. of Baytown, allegedly

SEC Charges Chris Choi & Poker Player Danny Kuo l Posted by Brenda Hamilton Attorney

On April 23, 2014, the Securities and Exchange Commission(the “SEC”) filed insider trading charges against a former accounting manager at Nvidia Corp. who tipped a friend with confidential company information that set in motion a chain of tipping and illegal trading among a network of hedge fund traders who reaped millions of dollars in illicit gains.  The

SEC Charges Hedge Fund Manager l Brenda Hamilton Attorney

On April 4, 2014, the Securities and Exchange Commission filed suit in United States District Court in Dallas, Texas, alleging that, from October 2009 to June 2012, Matthew D. Sample of San Diego, California used his hedge fund to raise almost $1 million from five investors based on representations

Prospectus Disclosure Requirements in Going Public Transactions

Private companies which offer and sell their securities to the public before completion of a going public transaction are subject to the same requirements under the Securities Act of 1933, as amended (the “Securities Act”) as public companies who securities to the public. Section 5 of the 1933 Act provides that an issuer may not use the mails or other means of interstate commerce to offer or sell its securities unless a registration statement is in effect under the Securities Act.

Anthonie R. Sparrow Sentenced in $16 million Scheme

On February 25, 2014, the FBI announced that Anthonie R. Sparrow pled guilty for his role in perpetrating a $16 million securities fraud scheme that victimized hundreds of investors around the world. Sparrow was charged in December 2009 and extradited from Spain.

Contemporaneous Private & Public Offerings l By Brenda Hamilton Attorney

Issuers often require capital during the going public process for their operations until their registration statement on Form S-1 is declared effective.  The SEC’s integration doctrine addresses the circumstances under which an issuer can raise capital privately while a registration statement is pending for a public offering.

The integration doctrine under was created to prevent companies from improperly avoiding

Form 3, 4 & 5 Filing Requirements l By: Brenda Hamilton Attorney

Upon completion of a going public transaction, officers, directors and certain shareholders have new rules and regulations they must comply with. These include the filing of beneficial ownership reports on Forms 3, 4 & 5. Each officer, director and 10% shareholder of a company with a class of securities registered under the Securities Act of 1934 must file a Form 3 disclosing the number of shares of the public company’s common stock he or she beneficially holdss.

The SEC’s Electronic Data Gathering and Retrieval System

Most documents filed with the Securities and Exchange Commission (the “SEC”), are required to be filed electronically using the SEC’s Electronic Data Gathering and Retrieval system (“EDGAR”). Additionally, public companies filing on EDGAR must tag their financial data using

Securities Attorneys Gone Wild l John Briner

On February 3, 2014, the Securities and Exchange Commission (the “SEC”) announced the filing of stop order proceedings against 20 purported mining companies for providing false information in their registration statements. Of the 20 registration statements, 18 were opined upon by the same attorney, Diane Dalmy, who is the subject of a pending SEC proceeding. Additionally, in June and July of last year, 17 of these 20 issuers subject to the registration

Crowdfunding Confusion

Crowdfunding is a term used to describe an evolving method of raising money through the Internet.While crowdfunding can be used to raise funds for many things, it generally has not been used as a means to offer and sell securities.This has caused some confusion about the legality of crowdfunding for some market participants.

Disclosure Controls and Procedures l Brenda Hamilton Attorney

To back up the officer and director certifications in periodic reports, issuers must establish and maintain a system of disclosure controls and procedures designed to ensure that the company records, processes, summarizes and discloses on a timely basis information required to be disclosed in 1934 Act filings.

Issuers must evaluate on a quarterly basis the effectiveness of their disclosure controls and procedures. The requirement that an issuer have disclosure controls and procedures  extends

SEC Shuts Down Pyramid Scheme Using Phony Companies l Securities Lawyer 101

On March 5, 2014, the Securities and Exchange Commission (the “SEC”) announced an emergency enforcement action to stop a fraudulent pyramid scheme by phony companies masquerading as a legitimate international investment firm.The SEC has obtained a

DTC Chills: A Big Conspiracy or Fraud l Securities Lawyer 101Blog

The Depository Trust Company (DTC) is the only stock depository in the United States.When DTC provides services as the depository for an issuer’s securities, its securities can trade electronically. Without DTC eligibility, it is almost impossible for an issuer to establish an active market in its stock. Issuers must satisfy specific criteria

SEC Charges Dewey & LeBoeu Executives with Securities Fraud

On March 6, 2014, the Securities and Exchange Commission (the “SEC”) announces charges against five executives at Dewey & LeBoeuf,and finance professionals. They are are accused of facilitating a $150 million fraudulent bond offering by Dewey & LeBoeuf, the international law firm where they worked. The SEC alleges that the five turned to accounting fraud when the firm needed money to weather the economic recession and steep costs from a merger.

Fearful that declining revenue might cause its bank lenders to cut off

SEC Announces Trading Suspension of Aventura Equities

On March 5, 2014, the Securities and Exchange Commission (the “SEC”) announced the temporary trading suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of Aventura Equities, Inc.(“Aventura”) commencing at 9:30 a.m. EST on

Direct Public Offerings l Registration Statements l Securities Lawyer 101

Private companies seeking to go public often use a direct public offering (“Direct Public Offering”).  Unlike an Initial Public Offering (“IPO”), a Direct Public Offering allows an

SEC Registration Statement Attorney l 2014 Q & A l Securities Lawyer 101

The new rules under the JOBS Act have increased interest in going public transactions and SEC registration statements as part of the capital raising process.  This blog post addresses some of the most common questions we are asked as registration statement attorneys about Form S-1 and direct public offerings..

Use of Form S-1 Proceeds In SEC Registration Statements l Securities Lawyer 101

Companies going public have several options in how to structure their transaction when registering securities with the Securities and Exchange Commission (“SEC”).  They can seek to raise capital using the registration or they can simply register shares on behalf of existing shareholders.  If the

SEC Settles Securities Fraud Charges Against Alexander Mascioli After Winnebago Offer

On March 19, 2014, the Securities and Exchange Commission (the “SEC”) filed settled securities fraud charges in the United States District Court for the District of Connecticut against Alexander H.G. Mascioli and his alter-ego, purported hedge fund, North Street Capital, LP (“NSC”).