SEC Issues Stop Order For Registered Offering

Securities Lawyer 101 Blog

The Securities and Exchange Commission (the “SEC”) issued an order to stop an initial public offering (IPO) by Counseling International and prevent the sale of its shares to the investing public.  In issuing the stop order, the SEC determined that the company’s registration statement contained false and misleading information. According to the SEC’s Edgar database, the registration has been amended 5 times since its original filing in August of 2012.  According to the SEC’s stop order, Counseling International’s registration statement failed to disclose the identity of the company’s control persons and promoters as required under the securities laws.

Among other deficient disclosures, the registration statement falsely describes the true circumstances surrounding the departure of the former CEO.

The interesting thing about the SEC’s stop order is that the registration statement registered the public resale of shares held by the issuer’s existing stockholders and not shares to be sold by the issuer.

The SEC Stop Order describes a very common scheme used by fraudsters to manufacture shell companies using bogus S-1 registration statements and nominee management.

SEC Stop orders proactively prevent fraud by halting the securities registration process before a company sells its registered stock to the public based on a deficient or misleading disclosures contained in a registration statement.  Counseling International first filed a registration statement in August 2012 for an initial public offering of 764,000 shares of common stock.

“A company’s registration statement is the bedrock on which its stock is offered to the general public, and Counseling International did not provide the accurate and complete information that investors would be entitled to when deciding whether it’s appropriate to invest in the company,” said Michele Layne, Director of the SEC’s Los Angeles Regional Office.  “Rarely do we have the opportunity to prevent investor harm before shares are even sold, but this stop order ensures that Counseling International’s stock cannot be sold in the public markets under this misleading registration statement.”

Counseling International agreed to the issuance of the order instituting the stop order proceeding, and also agreed not to engage or participate in any unregistered offering of securities conducted in reliance on Rule 506 of Regulation D for a period of five years from the issuance of the order.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, by email at info@securitieslawyer101.com or visit www.securitieslawyer101.com.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or info@securitieslawyer101.com. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com

Comments are closed.