SEC Charges Robert Vitale for Lying l Securities Lawyer 101
On May 30, 2013, the Securities and Exchange Commission (the “SEC”) announced Robert Vitale, the subject of an SEC enforcement inquiry plead guilty to criminal charges by the Justice Department for obstructing justice and lying to SEC attorneys investigating a real estate securities offerings to investors. Read More
Can I Accept Money From Finders?
Companies seeking capital are frequently approached by finders who offer to find investors in exchange for a percentage of funds raised. Most finders are not registered as broker-dealers with the Securities and Exchange Commission (the “SEC”). The possibility of receiving money even through the efforts of a finder creates a tempting opportunity for issuers and a lucrative proposition for the finder. While it may seem harmless enough, the SEC does not think so, and in fact, the SEC frequently brings cases against unregistered finders and those who aid and abet them. Read More
SEC Charges NASDAQ for Facebook IPO l Securities Lawyer 101
On May 29, 2013, the SEC charged NASDAQ with violating the securities laws as a result of its poor systems and decision-making during the initial public offering (IPO) and secondary trading of Facebook’s common shares. NASDAQ has agreed to pay the largest settlement ever handed down against an exchange – $10 million. Read More
SEC Settles Charges against RINO International
On May 15, 2013, Dejun “David” Zou and Jianping “Amy” Qiu settled the enforcement action brought by the Securities and Exchange Commission stemming from their alleged looting of Chinese reverse merger company, RINO International Corp. According to the SEC, Rino overstated its revenues by hundreds of millions of dollars. Zou and Qiu respectively the Read More
FINRA Seeks Access to Facebook Accounts Under Regulation FD l Securities Lawyer 101
On April 2, 2013, the SEC released a report on the use of social media by public companies, in which it clarified that public companies may use social media such as Twitter and Facebook to announce information in compliance with Regulation FD if they tell investors and shareholders ahead of time which social media they will use to disseminate that information.
The Financial Industry Regulatory Authority (FINRA), which regulates broker-dealers, has been concerned about the pervasive influence of the social media for some time. In 2011 it compiled a “Guide to the Web for Registered Representatives” that enumerated and explained compliance requirements for its members. Read More
Investor Relations 101 l Securities Lawyer 101 Blog
Investor relations or stock promotion involves the dissemination of information about a public company to increase its stock price and trading Read More
Short Sales 101 – Going Public Attorneys
In recent years, the activities of short sellers have been the subject of considerable controversy. While the average investor profits if he invests in a stock whose price increases, a short seller profits when a stock’s price declines. While short selling is a simple process, it is widely misunderstood. Simply put, a short sale is the sale of a security that the seller does not own.
Short sales can only be made on margin, and all the rules applicable to margin trading are enforced. To sell short, a trader must borrow stock and then sell it into the market. The sale is not complete until the trader ensures delivery of the security to the new buyer. His or her brokerage firm arranges the loan. The stock may come from the firm’s own inventory, the accounts of other clients on margin, or from another lender. Read More
Rule 144 For OTC Pink Companies – Going Public Lawyers
15c2-11 Application Going Public Attorney
Many private companies that go public are opting for the listing on the OTCMarket’s Pink Sheets due to the increased costs and more stringent regulations associated with Securities and Exchange Commission (“SEC”) reporting. Rule 15c2-11 (“SEC Rule 15c2-11”) of the Securities Exchange Act of 1934 (the “Exchange Act”) can be used by a private company seeking to go public without an SEC registration statement by a sponsoring market maker submitting a Form 211 with the Financial Industry Regulatory Authority (“FINRA”). Read More
SEC Sues Daniel Peterson for Fraud
On April 25, 2013, the Securities and Exchange Commission Division of Enforcement (“SEC”) announced that it had charged Daniel Peterson of Spokane, Washington, and his company USA Real Estate Fund 1 with securities fraud. According to the SEC, Daniel Peterson misled investors with false claims of enormous potential returns that could be generated by the wonderful investment opportunity he touted. He told his victims that his securities offering would be in Read More
How Can I Register Shares On Form S-8 ?
Registration of securities on Form S-8 (“Form S-8”) is a short-form registration statement under the Securities Act of 1933, as amended (“Securities Act”). Form S-8 is available to register securities offered to employees and consultants under benefit plans under limited circumstances. Because a registration statement on Form S-8 is effective upon filing it offers benefits to Securities and Exchange Commission (“SEC”) reporting companies, most significantly that an S-8 registration statement becomes effective upon filing and the shares registered may be issued without a restrictive legend. Read More
Market Makers in Going Public Matters l Securities Lawyer 101
The last step in going public transactions is most often obtaining a stock trading or ticker symbol from the Financial Industry Regulatory Authority (“FINRA”). For a company to obtain a ticker, a market maker must file a Form 211 with the Finance Industry Regulatory Authority (“FINRA”). Only a Market Maker can file a Form 211 to obtain a ticker symbol assignment.
What is a Market Maker?
A market maker is a FINRA registered broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Broker-dealers must register with the Financial Industry Regulatory Authority (“FINRA“) to act as a market maker of a security. Read More
The SEC Warns Investors of Oil and Gas Frauds
On May 2, 2013, the Securities and Exchange Commission (“SEC”) issued an investor alert warning of the increasing number of frauds involving private securities offerings for oil and gas ventures, as energy-related fraud cases mount at the agency. The SEC reports that the number of enforcement cases has averaged more than 20 per year since 2006. The SEC stated, while all investing involves varying degrees of risk, “Investing in private offerings, however, carries unique risks, and private oil and gas offerings have additional risks to consider.”
Red Flags in Oil and Gas Scams Read More
Informational Requirements of Rule 144 – Rule 144 Legal Opinion Requirements
Rule 144(c) of the Securities Act of 1933, as amended (the “Securities Act”) requires that stockholders of public companies relying upon Rule 144 satisfy its adequate current public information requirement. The requirements depend upon whether the issuer is a reporting or non-reporting company.
SEC Reporting Companies l Adequate Current Public Information
Rule 504 l OTC Pink Offerings
Rule 504 of Regulation D is a transactional exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) for non-reporting companies when they offer and sell securities. OTC Pink Sheet issuers often rely upon Rule 504 to offer and sell their securities.
Maximum Offering Amounts l Rule 504 Offerings
The aggregate amount raised for an offering of securities under Rule 504 cannot exceed $1,000,000, less the aggregate offering price for all securities sold within the twelve months before the start of and during the offering of securities under this Rule 504, in reliance on any exemption under section 3(b), or in violation of section 5(a) of the Securities Act. Read More
Crowdfunding l The SEC’s Invisible Rule
The Jumpstart Our Business Startups (“JOBS”) Act was signed into law by President Obama on April 5, 2012. The JOBS Act requires the Securities and Exchange Commission (the “SEC”) to issue final regulations regarding the portions of the JOBS Act relating to crowdfunding within 270 days of the law’s enactment on December 31, 2012. As of May 5, 2012, the SEC still has not issued the required JOBS Act’s final regulations concerning crowdfunding. More than a year after the passage of the JOBS Act, the future of crowdfunding remains in limbo. The uncertainty of crowdfunding under the JOBS Act continues to be a tremendous disappointment for issuers seeking to benefit from its securities offering provisions. Read More
Form 10-Q Requirements l Securities Lawyer 101 Blog
Public companies with a class of securities registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are subject to the periodic and current reporting requirements of Section 13 or 15(d) of the Securities Exchange Act. The Exchange Act contains ongoing disclosure requirements that provide investors with current information on an ongoing basis. These include an obligation to file periodic reports on Form 10-K and Form 10-Q and current reports on Form 8-K with the Securities and Exchange Commission (the “SEC”). Read More
Rule 504 l OTC Pink Checklist
Rule 504 of Regulation D is a transactional exemption from the registration statement requirements of the Securities Act of 1933, as amended (the “Securities Act”) for non-reporting companies when they offer and sell securities. OTC Pink Sheet issuers often rely upon Rule 504 to offer and sell their securities.
Brenda Hamilton, Securities Attorney, In Linkedin’s Top 1 %
Brenda Hamilton, a securities attorney and founder of Hamilton & Associates Securities Lawyers has been honored as a Top 1 Percent LinkedIn Subscriber. LinkedIn.com reports that Ms. Hamilton’s profile was in the top 1 percent of all profiles for 2012. Ms. Hamilton attributes the rating to the law firm’s leading role in representing microcap issuers in SEC investigations and DTC matters, and for its securities-related blog www.Securitieslawyer101.com, which focuses on securities law and issues affecting the microcap securities markets. Read More
Securities Lawyers Gone Wild l Carrillo Huettel
On March 15, 2013, the Securities and Exchange Commission (the “SEC”) charged securities law firm Carrillo Huettel and others in an alleged international “pump-and-dump” scheme involving two publicly traded U.S. companies, Pacific Blue Energy Corporation and Tradeshow Marketing Company Ltd.
According to the SEC’s complaint, Canadians John Kirk, Benjamin Kirk, Dylan Boyle, and James Hinton ran false and misleading promotions to pump the stock of Pacific Blue and Tradeshow so they could dump their shares. Read More
FINRA Bars Jeffrey Rubin for Transactions Involving 31 NFL Players
On March 7, 2013, the Financial Industry Regulatory Authority (“FINRA”) barred Jeffrey Rubin of Lighthouse Point, Florida, from the securities industry. Rubin was sanctioned for making unsuitable recommendations to an NFL player, advising him to invest in high-risk securities offered in a now-bankrupt casino project in Alabama. According to FINRA, the NFL player lost his investment of approximately $3,000,000. Thirty other players acting on Rubin’s advice invested funds in the same casino project. They lost approximately $40 million. Read More
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.” Read More
Supreme Court Says the Securities Statute of Limitations is 5 Years
On February 27, 2013, in the case of Gabelli v. Securities and Exchange Commission, the U.S. Supreme Court unanimously concluded that the securities statute of limitations for SEC enforcement actions seeking civil penalties expires 5 years after the time when the alleged fraud takes place, not when it is discovered. In 2008, the SEC brought a civil enforcement action against Gabelli, its Chief Operating Officer, and a former portfolio manager, alleging that they allowed an investor to engage in “market timing.” This activity ended in 2002. The SEC alleged violations of 15 U.S.C. §§ 80b-6(1) and (2) and sought civil penalties under § 80b-9. Read More