The Securities and Exchange Commission today amended a complaint to charge four former executives of Outcome Health, a private healthcare advertising company, with fraud in raising nearly half a billion dollars by falsely portraying the company as an overwhelming success to investors, clients, and auditors.
In our previous blog post, we wrote about the FDA’s recent releases detailing how they were unwilling to label CBD as a safe dietary supplement. In response to the FDA’s decision, two class action lawsuits have been filed in California against two major CBD companies: Charlotte’s Web and Infinite Products Co. The class action suits claim that by not operating in according with federal regulations and standards, the two companies have violated California law.
The FDA released a statement this week detailing how it has warned fifteen different companies for illegally selling products containing cannibidiol (CBD), and the agency addressed safety concerns it has regarding this newly popular ingredient. The violations include “marketing unapproved new human and animal drugs, selling CBD products as dietary supplements, and adding CBD to human, animal foods”. The FDA is also refusing to label CBD as GRAS (Generally Recognized As Safe).
A new type of IPO has gained prevalence recently, as big tech companies such as Slack and Spotify have decided to take their companies public via a Direct Listing Process (DLP), also known as a Direct Placement, or Direct Public Offering (DPO). In an Initial Public Offering, new shares are created, underwritten, and sold to the public. In a Direct Listing Process, on the other hand, no new shares are created and only existing, outstanding shares are sold with no underwriters involved.
Knightsbridge Private Partners, a New York firm, has been accused of making over $2 million from October 2018 to January 2019 by selling fake shares of stock in pre-IPO companies. They offered “pre-IPO” shares of Uber, Airbnb, and Lyft, often taking advantage of the elderly. The Department of Justice is currently investigating Knightsbridge. Forbes reported that Bank of America had seized over $100,000 from the firm in relation to the alleged fraud.
The Supreme Court this week agreed to hear the case of Liu vs. Securities and Exchange Commission. The issue at hand is “Whether the Securities and Exchange Commission may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation even though the Supreme Court has determined that such disgorgement is a penalty.”
The Plaintiffs Charles Liu and Xin Wang raised $27 million from 50 Chinese investors. The investors were seeking to take advantage of a federal program that provides visas to immigrants who invest in businesses that create jobs in America.
Seeking to improve the secondary market structure for “thinly traded securities”, the SEC has outsourced the creative process to anyone involved in this market who may have some good ideas. The SEC’s press release “invites exchanges and other market participants to submit innovative proposals designed to improve the secondary market structure for exchange listed equity securities that trade in lower volumes, commonly referred to as “thinly traded securities.”
Regulation A+ provides smaller companies with a flexible alternative to raising capital and going public in connection with direct public offering (DPO) and/or traditional initial public offering (IPO). Recent amendments allow companies that are subject to SEC reporting requirements to use Regulation A+ for their securities offerings. Going public is not mandatory, Regulation A+ can be used by both private companies and companies seeking public company status.
For companies going public on the OTC Markets, Regulation A+ streamlines the process of obtaining the stockholders necessary to establish an active trading market as required by the Financial Industry Regulatory Authority (“FINRA”) for the assignment of a stock trading symbol. Read More
On December 20, 2018, the 2018 Farm Bill was signed into law by the federal government. The 2018 Farm Bill “requires USDA to promulgate regulations and guidelines to establish and administer a program for the production of hemp in the United States.” As they write in the draft, the USDA is “issuing this interim final rule to establish the domestic hemp production program and to facilitate the production of hemp.” Further, the rule is supposed to expand production and sales of domestic hemp, benefiting both U.S. producers and consumers. Read More