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

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

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.

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

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..

Section 15(d) Reporting l Securities Lawyer 101

Upon completion of a going public transaction, an issuer that has registered equity or debt securities in an initial or direct public offering registered on Form S-1 under the Securities Act of 1933, as amended (the “Securities Act”) must file annual, quarterly and current reports with the Securities and Exchange

Form S-1 Risk Factor Disclosures l Securities Lawyer 101

The Securities Act of 1933 is often called the “truth in securities” law.It has two basic objectives: to require that investors receive financial and other important information about securities being offered for sale, and to prohibit deceit, misrepresentation, and other fraud in the sale of securities.

 

When an issuer files a Form S-1, it must provide disclosures about its business plan, its operating history, financial statements and risk factors. Risk factors are a primary part of Form S-1 registration statement disclosures.Item 503 of

XBRL Interactive Data l Securitis Lawyer 101

The use of eXtensible Business Reporting Language (XBRL) interactive data is intended to improve the accessibility of financial information to investors by making the information inexpensive and easier to use.  XBRL interactive data uses a standardized set of tags to consistently identify data in embedded text.  Issuers must identify each piece of data in its financial statements according to a standard list of tags assigned to the particular type of data.  Using XBRL, the issuer must “tag” financial information so that software applications will automatically recognize the information.

By tagging the information, investors and shareholders are able to locate, download and

Ask Go Public 101 l OTC Pink Sheet l Q & A

Q. What are the benefits of  listing on the OTCMarkets OTC Pink Sheets?

 

A.  There are a couple of benefits for companies opting to list on the OTC Pink Sheets.

Pink Sheet listings are much less expensive and the disclosure requriements are less stringent than a listing on the OTCMarkets OTCQB because audited financial statements are not required.  Despite that audited financial statements are not required, issuers who publish the information required by the OTCMarkets Pink Sheet Disclosure Guideslines provide transparency to investors and comply with SEC Rule 15c-211.

 

Going Public Insights l 2014

There have always been multiple ways that a private company could obtain public company status. In 2013, changes resulting from the JOBS Act, made going public transactions an appealing option for private companies seeking to raise capital. Rule 506(c) allows companies to conduct private placements prior to going public to offset their going public costs. In going public transactions, these privately placed shares are registered on Form S-1 and become the public float.

 

One traditional method of going public remains an Initial Public Offering (“IPO”).  The  IPO is rarely used by small companies as most will not  meet the

The Law of Going Public

A private company going public is subject to three federal securities laws, each with its own unique requirements.  The three laws are the Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934 (the “Exchange Act”) and the Sarbanes-Oxley Act of 2002 (”Sarbanes-Oxley”).

In addition to the federal securities laws, companies going public are subject to state securities regulation of their securities public and private offerings.  The Securities Act sets forth the regulations that govern the offer and sale of securities by an issuer and certain shareholders.

The Securities Act governs both private offerings such as those

conducted under Regulation D and public offerings such as those

SEC Comments 101 l Securities Lawyer 101

Securities offerings are regulated by the Securities Act of 1933, as amended, (the “Securities Act”).  Section 5 of the Securities Act requires that securities offerings be registered with the Securities and Exchange Commission (the “SEC”) or be exempt from the SEC’s registration requirements.

Private companies seeking to go public are often unaware of the SEC comment process. The SEC comment process applies to registration statements filed by companies who go public using an initial public offering (“IPO”) as well as to companies conducting a direct public offering.

The S-1 Registration Statement Process                 

In order to register securities with the SEC, issuers must file a registration statement with the SEC. Typically private companies

Direct Public Offering Checklist

For companies that have a reasonable time schedule for going public, a direct public offering provides an appealing option.  In direct public offering, a company’s shares are sold directly to investors by management, rather than through an underwriter.   A direct public offering dramatically reduces the costs and risks associated with a reverse merger.  Companies using a direct public offering in their going public transaction should consider these pointers.

Stockholders Requirements in Direct Public Offerings.

The Financial Industry Regulatory Authority (“FINRA”) requires that a company’s securities develop an orderly and liquid market.  To meet this requirement you must have a shareholder base of at least 20 non-affiliated stockholders who have somewhat

SEC Charges Hedge Fund Manager l Securities Lawyer 101 Blog

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 raised almost $1 million from five investors based on representations that he would use their money to trade on the investors’ behalf. Instead, the Commission alleges that he fraudulently
diverted approximately one-third of the money for his personal use and to make payments to other

SEC Charges Ponzi Scheme Operator Using YouTube l Securities Lawyer 101

On April 8, 2014, the Securities and Exchange Commission announced fraud charges and an asset freeze against the operators of a South Florida-based Ponzi scheme targeting investors through YouTube videos and selling them investments in a product called virtual concierge machines (VCMs)
that would purportedly generate guaranteed returns of 300 to 500 percent in four years.  In a parallel