Securities Lawyer 101 Blog The Jumpstart Our Business Startups Act (the “JOBS Act”) allows an “emerging growth company” to submit a draft of its registration statement and exhibits to the Securities and Exchange Commission (the “SEC”) on a confidential basis. This is particularly useful to companies in going public transactions who are unfamiliar with the SEC registration statement process. This... Read More
http://www.securitieslawyer101.com/registration-statement-2/
Friday, February 28, 2014
SEC Suspends Trilliant Exploration
Securities Lawyer 101 Blog On February 28, 2014, the Securities and Exchange Commission (“Commission”) ordered the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of Trilliant Exploration Corp. (“Trilliant”) of New York, New York due to the lack of complete and accurate publicly available information concerning, among... Read More
http://www.securitieslawyer101.com/trilliant-2/
http://www.securitieslawyer101.com/trilliant-2/
Section 16 Reporting & Going Public Transactions
Securities Lawyer 101 Blog Once the SEC staff declares a company’s Form S-1 registration statement effective in a going public transaction, the company becomes subject to Exchange Act reporting requirements even if it does not have its ticker symbol. Many issuers are not aware of the disclosure requirements that apply upon effectiveness of a Form S-1 Registration Statement. Section 16 Section 16(a) of... Read More
http://www.securitieslawyer101.com/reporting-obligations/
http://www.securitieslawyer101.com/reporting-obligations/
FBI Brings Securities Fraud Charges in $125 Million Medical Glove Scheme
Securities Lawyer 101 Blog Deepal Wannakuwatte, 63, has been arrested and charged with operating a massive Ponzi scheme that raised over $125 million from investors who believed they were investing in a company that had valuable contracts to supply gloves to the U.S. Department of Veterans Affairs. According to the FBI,Wannakuwatte told investors that his company, International Manufacturing Group... Read More
http://www.securitieslawyer101.com/wannakuwatte/
http://www.securitieslawyer101.com/wannakuwatte/
SEC Charges Arizona Based Equity Fund l Securities Lawyer 101
Securities Lawyer 101 Blog On February 25, 2014, the Securities and Exchange Commission (the SEC ) announced charges against an Arizona-based private equity fund manager and his investment advisory firm for orchestrating a scheme to misallocate their expenses to the funds they manage. The SEC Enforcement Division alleges that Scott A. Brittenham and Clean Energy Capital LLC (CEC) improperly paid more... Read More
http://www.securitieslawyer101.com/clean-energy/
http://www.securitieslawyer101.com/clean-energy/
Richard Altamore Convicted of Securities Fraud
Securities Lawyer 101.com/blog On February 26, 2014, the United States Attorney for the Southern District of Florida, and Federal Bureau of Investigation (FBI), Miami Field Office, announce that a federal jury convicted Richard Altomare, 65, of Palm Beach County, on four counts of an indictment, including one count of mail fraud and three counts of securities fraud. Altomare was the... Read More
http://www.securitieslawyer101.com/altamore/
http://www.securitieslawyer101.com/altamore/
Prospectus Disclosure Requirements in Going Public Transactions
http://www.securitieslawyer101.com/prospectus-disclosure/
Thursday, February 27, 2014
Reporting Obligations & Securities Act Registration StatementsO
http://www.securitieslawyer101.com/reporting-obligations/
Reporting obligations & Securities Act Registration Statements
http://www.securitieslawyer101.com/reporting-obligations/
FBI Brings Charges in Medical Glove Scheme
Securities Lawyer 101 Blog Deepal Wannakuwatte, 63, has been arrested and charged with operating a massive Ponzi scheme that raised over $125 million from investors who believed they were investing in a company that supplied medical and surgical gloves to Continue reading
http://www.securitieslawyer101.com/wannakuwatte/
http://www.securitieslawyer101.com/wannakuwatte/
Wednesday, February 26, 2014
Criminal Charges in Custodianship Hijackings Increase
http://www.securitieslawyer101.com/criminal-hijack/
SEC Charges Arizona-Based Equity Fund l Securities Lawyer 101
http://www.securitieslawyer101.com/clean-energy/
Tuesday, February 25, 2014
NASAA Comments On Regulation A+ l Securities Lawyer 101
Securities Lawyer 101 Blog On February 19, 2014, the North American Securities Administrators Association ( NASAA ) sent correspondence to the SEC in response to pending Regulation A+ proposals objecting to the SEC s preemption of state authority over small corporate offerings in its Regulation Continue reading
http://www.securitieslawyer101.com/regulation-a-3/
http://www.securitieslawyer101.com/regulation-a-3/
Sunday, February 23, 2014
SEC Provides Going Public Guidance l Securities Lawyer 101
http://www.securitieslawyer101.com/registration-statements-2/
Going Dark 101
Securities Lawyer 101 Blog The Sarbanes-Oxley Act, the declining U.S. economy and increasing legal, auditing and other compliance costs reduced the number of issuers electing to become Securities & Exchange Commission (“SEC”) reporting issuers, particularly in the microcap markets. With new Continue reading
http://www.securitieslawyer101.com/go-dark/
http://www.securitieslawyer101.com/go-dark/
Saturday, February 22, 2014
Florida’s Revised Limited Liability Company Act
Securities Lawyer 101 Blog On Jan. 1, 2014, Florida s Revised Limited Liability Company Act ( the Florida LLC Act ) became effective. The new law will impact both new and existing Florida limited liability companies. The Florida LLC Act creates Chapter 605 of Continue reading
http://www.securitieslawyer101.com/llc/
http://www.securitieslawyer101.com/llc/
Friday, February 21, 2014
The Securities Attorney’s Review of Corporate Records, Stock Issuances & Shareholder Records in the Going Public Process
http://www.securitieslawyer101.com/securities-lawyer-going-public/
Manhattan U.S. Attorney Charges Swiss Asset Manager With Conspiring To Hide Millions Of Dollars
http://www.securitieslawyer101.com/peter-amrein/
Manhattan U.S. Attorney and FBI Announce Insider Trading Charges
Securities Lawyer 101 Blog On February 21, 2014, Preet Bharara, the United States Attorney for the Southern District of New York, and George Venizelos, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation Continue reading
http://www.securitieslawyer101.com/perkins-hixon/
http://www.securitieslawyer101.com/perkins-hixon/
Manhattan U.S. Attorney and FBI Announce Insider Trading Charges Against Former Senior Managing Director of Investment Bank
http://www.securitieslawyer101.com/perkins-hixon/
SEC Charges Wall Street Investment Banker With Insider Trading to Pay Child Support
http://www.securitieslawyer101.com/hixon/
Donny Levy Sentenced to 126 months
Securities Lawyer 101 Blog On February 19, 2014, Donna Levy was was sentenced to 60 years for in connection with her conviction for Conspiracy to Commit Securities Fraud and Manipulation for Hire on Counts and 66 months for Securities Fraud concerning Banneker, Continue reading
http://www.securitieslawyer101.com/donny-levy/
http://www.securitieslawyer101.com/donny-levy/
Donny Levy Sentenced to 126 months
http://www.securitieslawyer101.com/donny-levy-sentenced-to-126-months/
Thursday, February 20, 2014
Why Both Private and Public Companies Need a Securities Attorney
http://www.securitieslawyer101.com/securities-attorney-going-public/
The SEC's Registration Statement Comment and Review Process
http://www.securitieslawyer101.com/sec-comment/
SEC Brings Charges In Movie Scam
http://www.securitieslawyer101.com/sec-brings-charges-in-movie-scam/
SEC Suspends Premier Beverage Solutions l Securities Lawyer 101
http://www.securitieslawyer101.com/premier-beverage/
SEC Suspends Premier Beverage Solutions l Securities Lawyer 101
http://www.securitieslawyer101.com/premier-beverage/
Monk Ordered to Pay Over $9,000,000
Securities Lawyer 101 Blog On February 12, 2014, the Securities and Exchange Commission (the SEC ) announced that a Connecticut federal court entered judgments against a former Connecticut-based stock promoter, Jerry S. Williams, and two companies that he controlled, Monk s Den, Continue reading
http://www.securitieslawyer101.com/monk/
http://www.securitieslawyer101.com/monk/
Wednesday, February 19, 2014
Seed Stockholders l Going Public Bootcamp
The going public process involves a number of steps that vary depending on the characteristics of the private company wishing to go public, and whether it will become a Securities and Exchange Commission (“SEC”) reporting issuer.
All companies seeking public company status must meet certain requirements in order for their securities to be publicly traded. One requirement is that the issuer obtain sufficient shareholders to establish a trading market.
Selling Shareholder Registration Statements in Going Public Transactions
Going public transactions can be structured a variety of ways. An initial public offering or primary offering involves a registration statement covering shares for sale by an issuer. Many going public transactions involve the filing of a registration statement with the Securities and Exchange Commission (“SEC”) registering shares held by existing stockholders so that the issuer can meet FINRA’s shareholder requirements.
This type of registration statement is referred to as a resale registration statement or secondary offering. The issuer does not receive proceeds from the sale of the securities subject to a resale registration statement. Companies often file resaleregistration statements when they have granted existing shareholders registration rights. An issuer can file a Form S-1 statement covering both a secondary offering by selling shareholders and a primary offering of its own behalf. This structure is common in going public transactions particularly when an issuer does not have enough stockholders for a ticker symbol assignment.
Rule 506(C) Q & A
Private placement offerings under Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) are a cost effective and relatively quick way for private companies to raise capital before, during and after a going public transaction. Rule 506(c) fundamentally changes the way unregistered offerings may be conducted. While the rule imposes stringent requirements, these requirements are manageable for issuers putting effective compliance strategies into place.
As of September 23, 2013, issuers were allowed to use general solicitation and advertising in Rule 506 (c) offerings made to accredited investors.
Thursday, February 13, 2014
Reverse Merger Bootcamp l Toxic Reverse Mergers
Over the last eight years, the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) have overhauled the rules and regulations applicable to reverse merger transactions. Not only have the SEC and FINRA jumped on the bandwagon to eliminate them, but, as will be explained,Depository Trust Company and national securities exchanges have joined
in their efforts. Among the SEC’s efforts to stem microcap fraud is a campaign to eliminate dormant shell companies to prevent them from being used in reverse merger transactions.
FINRA Issues $8 Million Fine for Anti-Money Laundering Compliance Failures
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined New York-based Brown Brothers Harriman & Co. (BBH) $8 million for substantial anti-money laundering compliance failures including, among other related violations, its failure to have an adequate anti-money laundering program in place to monitor and detect suspicious penny stock transactions. BBH also failed to sufficiently investigate potentially suspicious penny stock activity brought to the firm’s attention and did not fulfill its Suspicious Activity Report (SAR) filing requirements. In addition, BBH did not have an adequate supervisory system to prevent the distribution of unregistered securities. BBH’s former Global AML Compliance Officer Harold Crawford was also fined $25,000 and suspended for one month.
Criminal Charges in Corporate Hijackings on the Rise
The Justice Department has increasingly pursued criminal charges against corporate hijackers and their conspirators for illegal takeovers of publicly traded shell companies. In many instances, a securities attorney or transfer agent have been charged in connection with the schemes. Recent examples include the criminal convictions ofIrwin Brook and Lawrence S. Hartman. Broock a Florida securities lawyer. Hartman recently pled guilty to a charge of conspiracy to commit mail and wire fraud in connection with a corporate hijacking and shell trafficking fraud scheme. Hartman faces up to 20 years’ imprisonment and a maximum fine of $250,000.
SEC Explains Merger & Acquisiton Brokers
On February 4, 2014, the Securities and Exchange Commission (the “SEC”) released a No Action Letter in response to a request from the American Bar Association Task Force on Private Placement Brokers. The SEC’s response confirmed the circumstances under which Merger and Acquisition Brokers are exempt from the SEC’s broker-dealer registration provisions.
The SEC’s response provides useful information for both small and large business owners seeking to sell their businesses.
Diane Dalmy Announces She Was the Victim of Form S-1 Identity Theft
Diane D. Dalmy, a securities attorney, announced today that she is the victim of identity theft in connection with the unauthorized use of her name on 20 Form S-1 registration statements filed with the Securities and Exchange Commission. The 20 issuers in question were charged by the Securities and Exchange Commission with filing misleading S-1 registration statements for twenty mining companies. Last week, the SEC filed administrative stop order proceedings. Today, Ms. Dalmy has stated that the filings were made without her knowledge and the use of her name was unauthorized.
SEC Suspends Amogear, Inc.
On February 10, 2014, the Securities and Exchange Commission (“Commission”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of Amogear Inc. (“Amogear”), of Boston, Massachusetts, at 8:30 a.m. EST on February 10, 2014, and terminating at 11:59 p.m.EST on February 24, 2014.
The SEC suspended trading in the securities of Amogear because it has recently been the subject of spam e-mails touting the company’s shares and because of potentially manipulative conduct in the trading of the company’s shares.
Zombie Tickers 101
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The Securities and Exchange Commission (“SEC”) has continued its trend of instituting administrative proceedings to revoke the registrations of hundreds of dormant issuers. The issuers are being suspended pursuant to the Securities Exchange Act of 1934, after being delinquent in the filing of their periodic financial reports required by the Commission.
The SEC has been proactive in preventing corporate hijackings of dormant shell companies for reverse merger transactions and has suspended hundreds of issuers. We expect to see many enforcement actions arising from corporate hijackings of dorman shells in the near future.
Former Sheriff’s Deputy Sentenced in Ponzi Scheme Fraud
David N. Hawkins, a former sheriff’s deputy was sentenced to thirty months in federal prison for his role in a Ponzi scheme that raised more than $1.2 million from victims many of which were law enforcement personnel. Hawkins will also serve three years of supervised release upon completion of the sentence. Hawkins pleaded last year to one count of wire fraud and one count of money laundering.
SEC Suspends Trading of Centor Energy, Inc.
On February 11, 2014, the Securities and Exchange Commission (the “SEC”) announced the temporary suspension of trading in the securities of Centor Energy, Inc. (“Centor”), of Winter Park, Florida, commencing at 9:30 a.m. EDT on February 11, 2014, and terminating at 11:59 p.m. EST on February 25, 2014. The SEC temporarily suspended trading in the securities of Centor because of questions regarding the accuracy and adequacy of assertions by Centor, and by others, to investors in press releases and promotional material concerning, among other things, the Company’s assets, operations operations, and financial prospects. The SEC’s order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”).
Bangers, Bashers & Regulation SHO
When a manipulated stock’s price declines, it has become common practice for penny stock issuers and their disciples to scream foul play and claim their company is the victim of a stock basher-naked short seller conspiracy, working with nefarious clearing firms to send their stock price to the triple-zero graveyard. These same issuers also complain vociferously about the purported “agenda” of the United States Securities and Exchange Commission (“SEC”) andDepository Trust Company (“DTC”) to wipe out penny stocks altogether by turning a blind eye to illegal short sale activities.
It has become common practice for issuers and some Stock Bangers, also known as stock promoters or touts, to point to the Threshold Security List–the “Reg SHO List”–as evidence of illegal short sale activity that supposedly explains their declining stock prices.