Securities Lawyers Gone Wild l Brian Reiss
Securities Lawyers Gone Wild Series
On March 8, 2013, the Securities and Exchange Commission (the “SEC”) charged Brian Reiss, a California securities lawyer, with churning out baseless legal opinions for penny stocks traded on the OTC Markets platform. Transfer agents require legal opinions from securities lawyers in order to remove restrictive legends from stock issued in reliance upon an SEC exemption from registration. The SEC alleges that Reiss created a business and accompanying website called 144 letters.com to promote his opinion writing services. He proudly advertised “volume discounts” and assured potential clients that “penny stocks [are] not a problem.”
He sought to attract customers by bidding on search terms through Google’s Ad Words, and even relied on a computer-generated template to draft his opinion letters within minutes, absent any true analysis of the facts behind each stock offering.
The SEC alleges that the letters from Reiss contained false and misleading statements and facilitated the sale of securities in violation of the registration provisions of the federal securities laws.
Reiss was banned from writing opinion letters by Pink Sheets (now OTCMarkets) in 2006, but that action did not deter him from pursuing his chosen livelihood. Between January 2008 and December 2010 he penned more than 1,600 legal opinions.
Andrew M. Calamari, Director of the SEC’s New York Regional Office stated, “Reiss flouted his responsibilities as a gatekeeper in the issuance of stock, and churned out opinion letters to make a quick buck…Attorneys who act as gatekeepers in our markets have a solemn responsibility to ensure that they provide accurate information to the marketplace.”
According to the SEC’s complaint, Reiss wrote fraudulent legal opinions letters for $285 and offered a “volume discount” of $195 each for transactions involving two or more certificates of the same company, owned by the same shareholder. He routinely made inaccurate and sometimes contradictory statements about whether shares should be issued as unrestricted, without bothering to conduct an inquiry into relevant underlying facts.
According to the SEC’s complaint, the false and misleading statements Reiss made in opinion letters induced transfer agents to remove restrictive legends from stock that should not have become free trading.
The SEC has charged him with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. It seeks disgorgement of ill-gotten gains and financial penalties, as well as a bar preventing him from participating in the offering of any penny stock.
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 [email protected] 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 advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.
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Brenda Hamilton, Securities Attorney
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