Popular Messaging App Kik Shuts Down, Blames SEC

kik shuts down

The popular messaging app Kik raised over $100 million in 2017 in its Initial Coin Offering (ICO). Then, in June of 2019, the SEC sued them because they did not register the offering, as required by United States securities laws.

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South Florida Securities Lawyer Charged with Fraud

securities fraud

Jan Atlas, a 74-year old attorney based in Ft. Lauderdale was charged on September 17, 2019, with “one count of securities fraud, in violation of Title 15, United States Code, Sections 77q(a) and 77x, in Case No. 19CR60258.  The case is assigned to U.S. District Judge Beth F. Bloom in Fort Lauderdale.  If convicted, Atlas faces a maximum statutory sentence of up to five years in prison and a fine up to $10,000.”

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Director Bill Hinman Expands on SEC’s Approach to Crypto

sec crypto info

According to Forbes, Bill Hinman partook in a fireside chat at Cardozo Law School this week, where he “covered a range of topics related to the regulation of digital securities.” Hinman told Cardozo that the SEC continues to examine their approach to digital securities, and how current securities law should apply to cryptocurrencies and blockchain.

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SEC Adopts Rule 163B to Allow All Issuers to “Test-the-Waters”

new rule 163b

The SEC has just adopted Securities Act Rule 163B, which will allow all issuers to “gauge market interest in a possible initial public offering or other registered securities offering through discussions with certain institutional investors prior to, or following, the filing of a registration statement.” Previously, only emerging growth companies, or EGCs, were allowed this opportunity.

SEC Chairman Jay Clayton said “Investors and companies alike will benefit from test-the-waters communications, including increasing the likelihood of successful public securities offerings.” Read More

Ross Mandell Seeks More Info Through FOIA

Securities Fraud - Going Public Lawyers

Ross Mandell was the founder of Sky Capital Holdings, Ltd., a venture capital firm and brokerage. He is currently serving a 12 year sentence for defrauding investors of over $100 million from 2001 to 2006. His case was complicated because the vast majority of his dealings was with U.K. investors, and not U.S. investors, and the applicable law was not entirely clear over whether it was “extraterritorial”. George Conway, who is the husband of the famous Kellyanne, wrote an amicus brief with the Bar of the City of New York on behalf of Mandell’s case, writing that the law did not justify charging Mandell’s U.K. actions. The court disagreed however. You can read more about this here.

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SEC Awards More Than $1.8 Million to Whistleblower

sec award

The SEC announced on August 29, 2019, that they have rewarded $1.8 million to a whistleblower “whose information and assistance were critically important to the success of an enforcement action involving misconduct committed overseas.” Read More

The Evolving Regulatory Complexity Surrounding Marijuana, CBD, and Vaping

cbd regulation

According to Newsweek, the Trump administration is currently “preparing a complete ban on flavored e-cigarettes amid a rising number of vaping-related illnesses and deaths, but officials are leaving out a key part of the problem: marijuana products.” Whether Newsweek is right that marijuana products are a part of the problem or not, it is interesting to note how it is being left out. As they point out, “Marijuana is illegal under federal law, which makes it impossible for Congress or the FDA to pass any regulations around its use or sale, as they have with e-cigarettes and tobacco products. This means that there is no federal oversight when it comes to the manufacturing and sale of CBD and other cannabis derivatives. As a result, Trump administration’s ban is not expected to have a huge impact on the current marijuana industry, but it could push lawmakers to consider legalizing marijuana so as to ensure consumer safety.” Read More

The First SEC-Qualified Token Offering Raises $23M

sec-qualified token

Muneeb Ali, the founder of Blockstack PBC, released a blog post this week reporting that his company has raised $23 million in public token offerings. This is significant because Blockstack PBC was the first crypto company to gain SEC approval for a public token offering. They did this through a Regulation A+ offering, which you can read more about in our previous blog posts, which cover the topic extensively.

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SEC Questions Starbucks’ Accounting Policies

starbucks accounting

Starbucks’ stock fell today after news broke that the Securities and Exchange Commission sent a letter questioning the way that Starbucks recognizes its revenue. New accounting guidelines were implemented at the end of 2018 that is affecting many public companies. In Starbucks’ case, the SEC wanted clarification as to the reporting of a number of different deals that the company has made. One such deal was a nearly $7 billion agreement with Nestle that would allow them to sell Starbucks products in grocery stores. Another issue was with breakage, which is revenue that comes from unused gift cards or prepaid services.

When there are issues around revenue recognition, the SEC takes it very seriously because it’s an area that management can manipulate,” said Derryck Coleman, research manager at Audit Analytics. The Wall Street Journal also reported that as of the end of June, 50 other companies have also received letters from the SEC questioning their accounting methods. The SEC explained that companies need to be thorough enough in their reports to ensure that investors are aware of where revenues are coming from, and what the true financial state of the company looks like. Read More

Leading Vaping Company Juul Warned About its Practices

Juul bad practices

According to CNBC, the FDA has slammed vaping company Juul for illegal marketing practices and is threatening fines and seizures against the company. Juul has been claiming that its vapes/e-cigarettes are healthy alternatives to cigarettes, but it turns out that might not be the case.

Acting FDA Commissioner Ned Sharpless, M.D. said in a statement posted on the FDA’s website, “Regardless of where products like e-cigarettes fall on the continuum of tobacco product risk, the law is clear that, before marketing tobacco products for reduced risk, companies must demonstrate with scientific evidence that their specific product does in fact pose less risk or is less harmful. JUUL has ignored the law, and very concerningly, has made some of these statements in school to our nation’s youth.” Further, according to CNN, “In November, the FDA revealed that vaping had increased nearly 80% among high schoolers and 50% among middle schoolers since a year earlier. Public health experts have said that Juul has largely propelled the rise, commanding about 75% of the e-cigarette market in the United States.” Read More