Court Approves Settlement Between SEC and Covenant Partners

Settlement Approved Between SEC and Covenant PartnersThe United States Bankruptcy Court for the Eastern District of Pennsylvania issued an order approving of the terms of a proposed settlement between the SEC and Covenant Partners, L.P., a Philadelphia-area private equity fund. Read More

Court Enters Summary Judgment Against Enron’s Former CEO

Summary Judgment-Enron CEOThe Securities and Exchange Commission (SEC) obtained a summary judgment against former Enron president, COO, and CEO Jeffrey Skilling to conclude its civil case that was stayed by the court starting in 2004 until the outcome of criminal proceedings and appeals.

The Honorable Judge Melinda Harmon of the United States District Court for the Southern District of Texas issued an order finding that as a result of the collateral estoppel effect of Skilling’s criminal convictions and statement of non-opposition to the SEC’s motion for summary judgment, Skilling committed and was liable for each claim alleged against him in the SEC’s complaint filed in July 2004. Read More

SEC Files Suit Against Promoter of ZeekRewards

 

Trudy Gilmond Charged - Unregistered offer and Sale of SecuritiesOn December 4, 2015 the Securities and Exchange Commission (SEC) filed suit against Trudy Gilmond for her participation in the unregistered offer and sale of securities through Rex Venture Group LLC d/b/a ZeekRewards.com, an internet-based combined Ponzi and pyramid scheme. According to the Complaint, from approximately January 2011 until August 2012, when the ZeekRewards website was shut down, Rex Venture Group raised more than $850 million from approximately one million internet customers nationwide and overseas through the website.

The Complaint alleges that Gilmond solicited investors through the Internet and other means to participate in the ZeekRewards program, a self-described “affiliate advertising division” for the companion website, Zeekler.com, through which the company operated penny auctions. The ZeekRewards program offered customers several ways to earn money, two of which – the “Retail Profit Pool” and the “Matrix” – involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws. Read More

SEC Late Filers 101 – Going Public Attorneys

Late SEC Filers

It’s that time of year again when companies filing reports with the Securities and Exchange Commission (“SEC”) that have a December 31st year end, must file their annual report on Form 10-K. Recent enforcement actions against SEC filers and insiders for failure to comply with their SEC reporting obligations. It has become routine for the SEC to suspend issuers who become inactive and miss their annual 10-K or quarterly 10-Q filing deadlines. This is especially true for new SEC late filers who are unfamiliar with SEC reporting after their going public transactions.

The obligation to file Form 10-K annually and Form 10-Q quarterly reports originates from Section 13 or 15(d) of the Securities Exchange Act, and Rule 13a-1 and Rule 13a-13 promulgated there under. Late SEC filers receive only one automatic extension per filing so it is important that the late reports be filed within the required extension period. In the absence of extraordinary circumstances, as determined in the SEC’s sole discretion, no additional extensions are available to issuers.  The SEC has the ability to enforce periodic filing requirements by instituting enforcement actions against a delinquent SEC filer and/or its officers and directors seeking monetary or other penalties, including revoking the filer’s registration pursuant to Section 12(j) of the Exchange Act.  In the absence of egregious and/or repeated violations, or inferences of fraud, however, the SEC will not likely take action.

If you are a SEC reporting issuer missing a SEC filing deadline for a periodic report, these are some of the important issues that you should consider: Read More

OTCQB Listing, Eligibility & Quotation – Going Public Lawyers

OTCQB Listing, Quotation & Eligibility Attorneys

Posted by Brenda Hamilton, Securities and Going Public Lawyer

OTC Markets Group (“OTC Markets”) requires companies seeking quotation of their securities on the OTCQB® Venture Stage Marketplace (“OTCQB”) have an initial and ongoing $0.01 per share minimum bid price, submit an initial OTCQB application, pay annual fees, and submit annual certifications to the OTC Markets.  Companies that do not meet all of these requirements are demoted to the OTC Markets Pink® Marketplace (“OTC Pink”).  OTCQB companies must also be reporting with the Securities & Exchange Commission (“SEC”).

OTCQB Minimum Bid Test

Requirements for OTCQB listing include that the company: (i) must have a minimum bid price of $0.01 per share as of the close of each business day for each of the previous thirty calendar days prior to its application date and (ii) once quoted on the OTCQB, the company must maintain a minimum bid price of $0.01 per share as of the close of the business day at least one time per thirty (30) consecutive calendar days. Read More

SEC Charges Hui Feng With EB-5 Offering Fraud

EB-5 Offering Attorneys
The SEC filed a complaint alleging that Hui Feng and his firm, Law Offices of Feng & Associates P.C., acted as unregistered brokers by selling EB-5 investments to over 100 foreign investors, who were also their legal clients, and that they, directly or indirectly, received over $1.1 million in commissions in connection with these sales and are contractually entitled to at least an additional $3.1 million in commissions. The complaint also claims that Feng and his firm defrauded their investor clients by failing to disclose their receipt of commissions on the investments in breach of their fiduciary and legal duties to their clients, and that they also defrauded some of the entities offering the EB-5 investments. Read More

Court Finds Wayne Palmer Guilty in Ponzi Scheme

Ponzi SchemeThe Securities and Exchange Commission (SEC) won a case involving a Ponzi scheme. According to the SEC Wayne Palmer and his company National Note of Utah. The SEC filed fraud charges against them in June 2012 in connection with the Ponzi Scheme. The Court found that Palmer promised more than 600 investors a guaranteed 12% annual return and assured them their money was completely secured and being used to make hard money loans, purchase notes, and acquire real estate. In reality, Palmer deposited investor funds in one bank account titled “investor trust account,” wired the funds to a second bank account titled “investor interest account,” and then used the funds to pay returns to other investors. Read More

Rule 506 Offerings FAQ By: Brenda Hamilton Attorney

Securities Lawyer 101 Blog

Rule 506 Offerings are the most common of the Regulation D exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”).   It has been approximately a year since the Securities and Exchange Commission (the “SEC”) adopted new criteria for Rule 506 offerings. Under the new rules, issuers may use general solicitation and advertising in their securities offerings if certain conditions are met.  The SEC’s new rules also create “disqualifying events” for “covered persons” which prevent the issuer from relying on the Rule 506 exemption.

This blog post addresses the most common questions we received over the last year from our clients about the JOBS Act’ and its changes to Rule 506. Read More

SEC Files Subpoena Against NetCirq LLC

Regulation A+ Disclosure AttorneysOn November 25, 2015, the SEC filed a subpoena enforcement action against NetCirq, LLC (“NetCirq”). According to the SEC’s application and supporting papers, the SEC is investigating whether NetCirq and others have violated or are violating provisions of the federal securities laws in connection with transactions involving pre-IPO companies, including transactions that may constitute security-based swaps or secondary market trading in possible violation of certain registration requirements. Pursuant to the SEC’s subpoena dating back to May 2015, NetCirq was obliged to produce documents to the SEC, but failed to do so. Read More

Cry Me a Sater…Felix Sater & Donald Trump

 

Felix Sater - Securities Fraud

In February 2015, Felix Sater proudly announced the debut of a new website.  As he puts it, it “showcases [his] accomplishments, contributions, musings, and availability.”  Though Sater describes himself as a veteran of the commercial real estate industry, there’s more to his story, much of it unsavory.  While the site is promoted as a “hub for all things relating to Felix Sater,” it says nothing at all about his two criminal convictions, mob ties or the sealed docket that prevents the public from learning the details of his prior criminal conduct.

According to the website, one of Sater’s passions is politics.  It seems only fitting that in recent days a number of articles have appeared in the mainstream press examining his business association with Republican presidential candidate Donald Trump.

Sater was born in the Soviet Union in 1966, but his family moved to Brighton Beach in New York City when he was a child.  At 20, he became a stock broker.  His career came to an abrupt end in 1991, when he viciously attacked a colleague in a barroom brawl, breaking the man’s jaw and slashing his face with a broken margarita glass.  Sater was sent to prison for first degree assault.  Oddly, the National Association of Securities Dealers, as FINRA was then called, did not ban him from the industry until February 2000, though Broker Check indicates that its report on Sater contains “very limited information.” Read More