Reverse stock splits are often used by public companies to reduce the amount of securities outstanding. Reverse splits are also be used by private companies in corporate restructurings. Typically in a reverse split, a company reduces the number of its outstanding shares in proportion to the ratio of the reverse stock split so that each stockholder the same percentage of the company’s outstanding shares immediately prior to and after the reverse split. If approved and effected, the reverse stock split will be realized simultaneously and in the same ratio for all of the company’s common stock. The reverse stock split will affect all holders of the company’s common stock uniformly and will not affect any stockholder’s percentage ownership interest in the company. Read More
On June 1, 2015, the Financial Industry Regulatory Authority (FINRA) announced that it had launched a campaign promoting BrokerCheck (brokercheck.finra.org). BrokerCheck allows investors to access information about a broker’s employment history, certifications and licenses, as well as regulatory actions, violations or complaints made against them. BrokerCheck does not include information about all brokers registered with FINRA. Additionally, some fraudster brokers have discovered they can avoid disclosure of negative information on BrokerCheck simply by changing their name. Read More
On June 3, 2015, the Securities and Exchange Commission announced insider trading charges against four individuals stealing confidential information from investment banks and their public company clients in order to trade in advance of secondary stock offerings. The scheme allegedly involved at least 15 stocks and generated more than $4.4 million in illegal trading profits.
The SEC charges allege that a former day trader living in California, Steven Fishoff, schemed with two friends and his brother-in-law to pose as legitimate portfolio managers and induce investment bankers to bring them “over the wall” and share confidential information about an upcoming secondary offering. After promising they wouldn’t disclose the nonpublic information to others or trade an issuer’s stock before an offering was announced, they violated the agreements and tipped each other about the upcoming offerings expected to inherently depress the price of the issuer’s stock. Read More
On June 1, 2014, the Securities and Exchange Commission (SEC) announced it had brought charges in a Ponzi Scheme. According to the SEC Charges, the scheme was orchestrated by an investment adviser who took siphoned money from his investment fund and defrauded investors, including several local teachers and law enforcement officers. The SEC complaint alleges that Phil Donnahue Williamson conducted a Ponzi scheme with money he raised for the Sterling Investment Fund, which purportedly invested in mortgages and properties in Florida and Georgia. Read More
Over the past few weeks, we have had multiple requests from investors to review information they received after calls from boiler room sales persons. No doubt the increase in phone rooms has resulted from Rule 506(c) which allows generals solicitation of unregistered offerings if certain conditions are met, including that the issuer verify that all purchasers are “accredited investors”. Everyone who’s seen the movie “Boiler Room” is familiar with how these operations work; for once, the film makers had no need to exaggerate. Real-life boiler rooms are run by unscrupulous con artists who hire cold callers to sell stocks and other securities to their naïve and unwary victims, using extremely high-pressure sales tactics. Because of the large number of retirees in South Florida, its investors are prime targets for boiler room solicitations.
The classic boiler room is run by a broker-dealer that claims to be independent, specializing in stocks chosen by their “analysts,” who, they say, have conducted extensive due diligence on the issues. In reality, the boiler room usually colludes with company management and/or insiders. Often they own large blocks of stock obtained at very low prices; sometimes they paid nothing at all. They will sell into their own promotion. Read More
On May 28, 2014, the Securities and Exchange Commission released the agenda for its Advisory Committee on Small and Emerging Companies meeting which is scheduled for June 3. The SEC’s meeting will focus on public company disclosure effectiveness, intrastate crowdfunding, venture exchanges, and the treatment of “finders.” The SEC Advisory Committee also is expected to vote on a recommendation to the SEC with respect to the “Section 4(a)(1½) exemption,” which would allow shareholders to resell securities sold in private placements. The SEC meeting will be held at the SEC’s headquarters, and is open to the general public.
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 and compliance 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.
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
We’ve so far written twice about North Dakota Developments (“NDD”), a real estate Ponzi scheme operated by Daniel J. Hogan and Robert L. Gavin. In the course of the scam, Gavin and Hogan, who are United Kingdom citizens, relieved investors of more than $62 million. The pair persuaded their victims, many of them elderly and vulnerable, to purchase interests in “units” at what are called “man camps”–workers’ housing—in properties to be built in the Bakken oil fields of North Dakota and Montana.
The interests purchased were not actual real estate, but securities. The Securities and Exchange Commission (“SEC”) therefore had jurisdiction of them and of NDD and its managers Gavin and Hogan. On May 5, 2015, it acted, obtaining a temporary restraining order against the company and the perpetrators. Judge Daniel Hovland also ordered an asset freeze of the defendants’ bank accounts and those of other companies they controlled. Read More
When a company decides to raise money in a Regulation D offering as part of its going public transaction, it must file a Form D – Notice of Sales with the Securities and Exchange Commission Rule 504, 505 or 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). A Form D must also be filed for an exempt offering made pursuant to the accredited investor exemption of Section 4(5) of the Securities Act.
An issuer with a previously filed notice on Form D should file an amended Form D to: Read More
On May 13, 2015, the Securities and Exchange Commission (SEC”) announced that Douglas Parigian pled guilty to criminal charges of conspiracy and securities fraud for his role in an insider trading ring involving trading in the stock of American Superconductor Corporation. The criminal charges against Parigian arose out of the same fraudulent conduct alleged in an SEC action for securities fraud filed against Parigian and others in July 2014.
On July 9, 2014, the U.S. Attorney’s Office for the District of Massachusetts indicted Parigian and another defendant, Eric McPhail, for conspiracy and securities fraud and, for Parigian only, lying to FBI agents. The U.S. Attorney charged that McPhail had a history, pattern and practice of sharing confidences with a senior executive at American Superconductor. Between 2009 and 2011, the senior executive provided McPhail with material, nonpublic information concerning the company’s quarterly earnings and other business activities (the “Inside Information”) with the understanding that it would be kept confidential. Read More
- The revisions to the SEC’s EDGAR filer manual reflect recent amendments to Regulation A to accept Regulation A forms including DOS, DOSLTR, 1-A, 1-A/A, 1-A POS, 1-A-W, 1-A-W/A, 253G1, 253G2, 253G3, 253G4, 1-K, 1-K/A, 1-SA, 1-U, 1-U/A, 1-Z, 1-Z/A, 1-Z-W and 1-Z-W/A.
- Additionally, an issuer filing on EDGAR for the first time in a going public transaction can select a “Regulation A” offering option on their Form ID to reflect it is submitting the Form ID application for EDGAR access to file Regulation A draft offering statements. Forms submitted pursuant to Regulation A can be accessed at a “File Regulation A Forms” tab.
- Issuers filing draft offering statements under Regulation A+ must prepare and submit their draft offering statements using EDGAR form types DOS and DOS/A, and must use the submission type Draft Offering Statement Letter (DOSLTR) to submit correspondence related to their draft offering statements.
- Issuers which file confidential draft Regulation A offering statements can publicly file previously submitted drafts by selecting the “Disseminate Draft Offering Statement” tab on the “File Regulation A Forms” page of the EDGAR website.