Donna Levy Sentenced

On February 19, 2014, Donna Levy was was sentenced to 60 months 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, Cardiac Networks to run concurrently. In criminal cases when

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.

House Committee Passes Law Reducing Business-Broker Regulation

On November 14, 2013, the Financial Services Committee of the U.S. House of Representatives voted unanimously to report HR 2274, as amended, to the full House with a favorable recommendation.  HR 2274 is known as the Small Business Mergers, Acquisitions, Sales, and Brokerage Simplification Act of 2013, and its intention is to amend the Securities Exchange Act of 1934 (“Securities Act”) to provide for a notice-filing registration procedure for business brokers performing services in connection with the transfer of ownership of small privately held companies and to provide for regulation appropriate to the limited scope of their activities.

Under existing regulations, the same broker-dealer registration requirements apply to business brokers who assist with the sale of a small business to a purchaser who will be active in managing the business after sale and a securities brokers who engage in the offer and sale of securities of a publicly-traded companies to passive investors.  Existing regulations fail to distinguish between these two activities despite the obvious need for differential treatment.