TD Ameritrade puts out list of liquidation only stocks ahead of September 28, 2021 Rule 15c-211 amendments
On September 28, 2021, new amendments to Rule 15c-211 under the Securities Exchange Act of 1934 go into effect to enhance investor protection and improve issuer transparency. These amendments will restrict the ability of market makers to publish quotations for those companies that have not made required current financial and company information available to regulators and investors.
Read: Rule 15c2-11 Compliance Deadline Draws Near
Ahead of the enforcement date, TD Ameritrade published its list of stocks that will become “liquidation only”. This list, which is extensive and includes around 5,000 securities, is subject to change.
Starting in mid-August, TD Ameritrade will only accept orders to liquidate positions – (i.e., no new buy orders) in the 5,000 or so listed securities.
All penny stock investors should take notice, as this will undoubtedly negatively affect the stock prices of all listed securities, especially considering that TD Ameritrade is the second-largest broker with over 11 million users.
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 [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 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
SEC charges former CEO and CFO of FTE Networks, Inc with accounting fraud
Today, July 15, 2021, the Securities and Exchange Commission (the “SEC”) charged the former CEO and CFO of FTE Networks, Inc. (“FTE”), a network infrastructure company formerly based in Naples, Florida, with conducting a multi-year accounting fraud.
The alleged scheme involved inflating the company’s revenues for certain periods by as much as 108 percent, the misappropriation of millions of dollars of company funds for personal use, and concealing the then NYSE-listed publicly-traded company’s issuance of almost $23 million in convertible notes.
SEC Suspends Trading in 55 Abandoned Issuers in Sweeping Order
Today, the Securities and Exchange Commission (the “SEC”) suspended trading in 55 publicly traded penny stock companies because of public interest concerns.
According to the Order, all 55 issuers have stopped making public disclosures putting their operating status into question.
Many of the stocks were formally involved in pump & dump schemes and other types of securities fraud. Some even had insiders charged by the SEC and criminally Indicted. Still, the one thing they all had in common is that none of the companies have made any public disclosures through OTC Markets for a considerable time.
After an effort to contact each of the companies, the SEC determined that they were no longer operating and posed a public concern because of the potential for market manipulation via social media and online trading groups.
SEC Charges Three Individuals with Insider Trading
On July 9th, the Securities and Exchange Commission (the “SEC”) charged three individuals with insider trading in advance of an announcement by Long Blockchain Company (formerly known as Long Island Iced Tea Co.) that it was going to “pivot” from its existing beverage business to blockchain technology, which caused the company’s stock price to soar.
According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, Eric Watson, an undisclosed control person of Long Blockchain who helped drive this business change within the company and signed a confidentiality agreement not to disclose the company’s business plans, tipped his friend and broker, Oliver Barret-Lindsay, of such plans, including by sharing with him a draft of the company’s press release.
Barret-Lindsay, in turn, allegedly passed the material nonpublic information on to his friend, Gannon Giguiere.
Within hours of receiving this confidential information, Giguiere purchased 35,000 shares of Long Blockchain stock. According to the complaint, the company’s stock price skyrocketed after the press release was issued, spiking more than 380% intraday. Within two hours of the announcement, Giguiere sold his shares for $162,500 in illicit profits.
SEC sanctions Elaine A. Dowling and Harold P. Gewerter and charges Shawn Hackman in scheme to skirt a previous ban
On July 1st, the Securities and Exchange Commission (the “SEC”) filed charges against banned attorney Shawn F Hackman for violating a September 10, 2002 Commission Order that suspended him from appearing or practicing before the Commission as an attorney after the Supreme Court of Nevada disbarred him.
According to the Application filed in federal district court, pursuant to Section 21(e)(1) of the Securities Exchange Act of 1934, Hackman violated the order by (1) drafting and providing legal advice on SEC filings made by scores of companies, and (2) directly communicating with SEC staff on substantive legal issues concerning SEC filings.
The SEC’s Application further alleges that Hackman earned more than $800,000 for work that violated his suspension order.
The SEC seeks a federal court order requiring him to comply with the suspension order and to disgorge all profits earned in violation of that order.
SEC Charges Goldman Small Cap Research and its Owner for Failing to Disclose Compensation
On June 30, the Securities and Exchange Commission (the “SEC”) announced settled charges against Reuben Robert Goldman and his online stock promotion firm, Two Triangle Consulting Group LLC, which does business under the name Goldman Small Cap Research, for failing to disclose that they had been paid to create and distribute tweets promoting the securities of ten issuers.
Goldman, age 52, the founder, owner, and sole employee and “chief analyst” of Goldman Small Cap Research, is a resident of Pikesville, Maryland. Between 1989 and 2003, Goldman was associated with several broker-dealers and held Series 7, 62, 63, and 65 licenses.
Goldman Small Cap Research’s business primarily consists of producing promotional materials about microcap issuers and distributing these materials online to potential investors in exchange for cash payments from the issuers or third parties. Goldman Small Cap Research distributes stock market research and promotional material through its website (GoldmanResearch.com), subscription-based e-mail lists, and its accounts on Twitter and Facebook.
SEC Suspends Trading in Enerkon Solar International Inc (ENKS)
On Wednesday, June 23rd, the Securities and Exchange Commission (the “SEC”) suspended trading in Enerkon Solar International Inc (ENKS).
The Suspension Order cited multiple public interest concerns. Specifically, the lack of adequate and accurate information in Enerkon’s quarterly and annual financials submitted to OTC Markets from December 31, 2018, through March 31, 2021, relating to the identity of significant owners of Enerkon’s securities.
The SEC also had questions about the accuracy and adequacy of publicly disseminated information in press releases, including recent ones from March and May, concerning, among other things, Enerkon’s acquisition of CoviKlear Holdings International.
OTC Markets Requests 15c-211 Disclosures by June 30
OTC Markets Pink companies will need to update their disclosure to ensure they comply with the new requirements.
- Alternative Reporting Companies: OTC Markets has updated the Disclosure Guidelines for Alternative Reporting Companies to include all the information required under amended Rule 15c2-11. Companies must follow the Guidelines to be designated “Current Information” or “Limited Information” and remain publicly quoted.
- Bank Reporting Companies: OTC Markets has created new Disclosure Guidelines for Bank Reporting Companiesto include all the information required under amended Rule 15c2-11. Banks and bank holding companies must follow these Guidelines to be designated “Current Information” or “Limited Information” and remain publicly quoted.
- International Reporting Companies: Companies that are current in their periodic disclosure and are listed on a Qualified Foreign Exchangethat requires disclosure in English will remain in compliance and may continue to be publicly quoted. Other international companies seeking to ensure their ongoing compliance may publish their disclosure directly to OTC Markets for review.
OTC Markets has indicated Impacted OTC Pink companies should provide the required disclosure to OTC Markets by June 30th. This will ensure that the OTC Markets Issuer Compliance Team has sufficient time to review and update market status for companies prior to the rule’s compliance date on September 28th. Securities that do not meet the Rule’s disclosure standard will have their public quotes removed from the OTC Markets Pink as of the September deadline.
Rule 15c2-11 Compliance Deadline Is Just Around the Corner
In September of last year, the Securities and Exchange Commission (the “SEC”) adopted amendments to Securities Exchange Act Rule 15c2-11. In early 2020, we wrote about amendments to Rule 15c2-11 that were proposed by the SEC in September 2019. The object of the proposed changes was, according to the regulator, to ensure that over-the-counter issuers—better known as penny stocks—would make “current information” available to prospective investors. Issuers are reminded that the deadline for compliance is just around the corner.
SEC Rule 15c2-11, last revised in 1991, provided that before quotations could be initiated for an OTC issuer, the issuer would need to find a sponsoring market maker who would, relying on “current information” provided by the company, compile and submit a Form 211 to the Financial Industry Regulatory Authority (“FINRA”). FINRA would process the form, and the stock could then begin to trade. For one month, it would only be quoted by the sponsoring market maker; subsequently, other market makers could rely on the “piggyback exception” and publish their own quotes.
Over the past 30 years, the OTC Markets has changed enormously. Once it was an obscure corner of the larger equity marketplace. But with the dawn of the Internet age and the rise of online discount brokerages, information about penny stocks that in the past could only be obtained by telephoning a broker or by subscribing to the daily “Pink Sheets”—so called because they were printed on pink paper—became available to anyone who owned a computer hooked up to the Worldwide Web. At the same time, the heady bull market driven by skyrocketing dot.com companies brought millions of new investors to the markets generally. Vastly lower commissions charged by the discount brokers made frequent trading practical for people who fancied themselves “players,” and opened the penny market to the general public. Read More
SEC Charges Mark Miller for Hijacking Inactive Penny Stock Companies to use for Pump & Dump Schemes
On Friday, June 18th, the Securities and Exchange Commission (the “SEC”) filed a Complaint in the United States District Court for the District of Minnesota against Minnesota resident, Mark Allen Miller, for engaging in a fraudulent scheme to target at least seven inactive penny-stock companies (the “Issuers”) with the intention of profiting through pump & dump activity.
The seven Issuers include Bebida Beverage Company (“BBDA”), Bell Buckle Holdings Inc (“BLLB”), Digitili Inc (“DIGI”), Encompass Holdings Inc (“ECMH”), Simulated Environment Concepts Inc (“SMEV”), Strategic Asset Leasing Inc (“LEAS”), and Utilicraft Aeropace Industries Inc (“UITA”).
According to the SEC complaint, between September 2017 and August 2018, Miller hijacked five of the companies, BLLB, DIGI, ECMH, SMEV, and UITA, using forged resignation letters and other falsified documents. Then, after illegally gaining control, Miller ran pump & dump schemes on the Issuers using false and misleading press releases and tweets. Read More
Senators Leahy and Grassley Introduce EB-5 Investor Visa Integrity Reform Bill
Brenda Hamilton was recently quoted in an article published on the EB5 Investors blog. EB5 Investors is one of the world’s largest publications in the immigration law industry. The article, published on June 16th details a recent court order by a California federal court mandating that defendants Charles Liu and his wife Xin Wang repay $20.8 million in disgorgement to the U.S. Securities and Exchange Commission.
“This case demonstrates the vulnerabilities of foreign investors seeking to enter the U.S. using the EB-5 Visa program and the SEC’s interest in pursuing securities violators like Liu and Wang who take advantage of these vulnerabilities.”
The full article can be read at https://www.eb5investors.com/blog/eb5-visa-liu-fraud-case.
With the EB-5 Investor Visa Integrity Reform Bill EB-5 Regional Center Program set to expire on June 30th, absent bipartisan integrity reforms, Senator Patrick Leahy (D-Vt.), a senior member and former chairman of the Judiciary Committee, and Senator Chuck Grassley (R-Iowa), Ranking Member of the Senate Judiciary Committee, introduced the EB-5 Reform and Integrity Act of 2021 to address fraud and national security vulnerabilities in the EB-5 investor visa Regional Center Program, which has been exploited and abused for years.
SEC Charges RenovaCare, Inc and its Controlling Shareholder with Securities Fraud
On May 28, 2021, the Securities and Exchange Commission (“SEC”) charged RenovaCare, Inc. (RCAR), a development stage company headquartered in New Jersey, and its controlling shareholder, Harmel S. Rayat, with securities fraud for intentionally concealing Rayat and the company’s role in promotional activities, including by drafting and issuing a press release that denied their participation in those activities.
SEC Charges U.S. Promoters of $2 Billion Global Crypto Lending Securities Offering
On May 28, 2021, the Securities and Exchange Commission (the “SEC”) announced filing an action against five individuals alleging that they promoted a global unregistered digital asset securities offering that raised over $2 billion from retail investors.
The SEC just suspended my stock! Now what?
It can be the worst feeling in the world. You wake up, get your trading station all ready for a new day of profitable trading, but then the unthinkable happens. The market opens, but not that volatile issuer that had been running big, making your trading account look so good.
SEC Charges Healthcare Company and Its Founder with Multimillion Dollar Fraud
On May 19, 2021, the Securities and Exchange Commission (the “SEC”) charged a New Jersey-based healthcare company and its founder, Josiah David (formerly known as Dennis Lee), with fraudulently raising nearly $4 million from over 130 investors nationwide through the sale of membership units in the company.
Two Jackson Men Charged in Multi-Million Dollar Fraud Scheme Conspiracy
On May 20, 2021, Ted Brent Alexander, 55, and Jon Darrell Seawright, 49, both of Jackson, Mississippi, were indicted by a federal grand jury for their roles in a large multi-million dollar Ponzi scheme that adversely affected hundreds of victims across multiple states over about eight years.
The case is currently scheduled to go to trial on July 6, 2021, before United States District Judge Carlton W. Reeves in Jackson.
Both Alexander, a prominent lobbyist for Baker Donelson, and Seawright, a law partner at Baker Donelson, are charged with one count of conspiracy to commit securities fraud and wire fraud; one count of securities fraud; and four counts of wire fraud involving a scheme to defraud investors, all in connection with a Ponzi scheme promising guaranteed returns to investors who thought they were lending money to a ‘broker” enterprise purchasing timber that was then marketed to multiple lumber mills. Read More
Going Public: Myths and Misinformation about Reverse Mergers
Startups and businesses with limited cash looking to go public are understandably very money-conscience and want to use the most cost-effective route. The survival and/or further development of their business may depend on getting access to capital raised through the public marketplace and managing the process without breaking the bank.
Reverse Mergers have long been considered one of the most cost-effective and fastest ways to go public, but is it really the best option?
The truth is that there are lots of myths and misinformation in the marketplace about Reverse Mergers. Let’s review some of them.
Myth #1: Reverse Mergers are the cheapest way to go public
Yes, it is possible to find publicly-traded shells for sale to use as a public vehicle for a Reverse Merger, but existing shells come with lots of risks that, in the long run, could lead to exorbitant costs and even the loss of your business.
The cheaper the shell, the more risk. The biggest risks being: Read More
David C. Coggins Sentenced for $1.3 Million Securities Fraud Scheme
On Friday, May 14, 2021, David C Coggins, 42, of Miami, was sentenced to 51 months in prison, followed by 36 months of supervised release, and ordered to pay $1,305,000 in restitution for operating an investment scheme in which he used investor funds to repay other investors and misappropriated funds for himself, including to pay for personal use, a vehicle and travel.
There has never been a better time to be a Whistleblower
The Securities and Exchange Commission (the “SEC”) began its whistleblower program in August of 2011.
The concept was simple, to catch more bad guys and minimize the harm done to investors, the SEC created a program that would incentivize people with knowledge of possible securities law violations and other forms of fraud for sharing that information, allowing the SEC to more swiftly and efficiently hold accountable those responsible for unlawful conduct.
If the information proves to be original and leads to SEC action, the whistleblower is eligible for an award ranging between 10% and 30% of the money collected. Since the SEC would likely not have brought litigation without the information provided by the whistleblower, it is a win-win situation for all involved, especially the victims who otherwise may not have ever recouped any of their losses.
SEC Charges Broker-Dealer for Failures Related to Filing Suspicious Activity Reports
On May 12, 2021, the Securities and Exchange Commission (the “SEC”) announced settled charges against GWFS Equities Inc. (GWFS), a Colorado-based registered broker-dealer and affiliate of Great-West Life & Annuity Insurance Company, for violating the federal securities laws governing the filing of Suspicious Activity Reports (SARs).
Mark Lisser Pleads Guilty to Securities Fraud Conspiracy
Earlier today, in federal court in Central Islip, Mark Lisser pleaded guilty to securities fraud conspiracy for lying to customers about investments in shares of several companies prior to the initial public offering (IPO) of those companies.
SEC Charges Under Armour Inc With Disclosure Failures
On May 3, 2021, the Securities and Exchange Commission (“SEC”) charged sports apparel manufacturer Under Armour Inc (NYSE: UAA) with misleading investors as to the basis of its revenue growth and failing to disclose known uncertainties concerning its future revenue prospects. Under Armour has agreed to pay $9 million to settle the action.
Court Enters Judgments Against Promoters in Pump-And-Dump Scheme
On May 7, 2021, the Securities and Exchange Commission (“SEC”) announced that the U.S. District Court for the Central District of California entered final judgments against the remaining three defendants in a 2019 SEC action charging them for their alleged roles in a pump-and-dump scheme in the stock of southern California beverage and cannabis company Green Cures & Botanical Distribution, Inc (GRCU).
On May 20, 2019, the SEC charged Ishmail Calvin Ross, Zachary Logan, Jessica Snyder, and David N. Osegueda with deceiving a brokerage firm into allowing Ross, Logan, and Osegueda to deposit their GRCU stock into their accounts in advance of their pumping up the company’s stock price through a promotional campaign. Ross, Logan, and Osegueda then allegedly dumped their shares on unsuspecting investors, generating approximately $1.9 million in illicit proceeds. Read More
TD Ameritrade to restrict orders in Caveat Emptor designated OTC securities to liquidating trades only
According to a statement posted on the TD Ameritrade website, the popular trading platform will restrict orders in Caveat Emptor designated OTC securities to liquidating trades only starting May 25, 2021.
Robinhood Legal Battle Updates
On April 16, 2021, the Securities and Exchange Commission (“SEC”) case against Robinhood Financial moved one step closer to a payout when the SEC issued an Order appointing JND Legal Administration as the Fund Administrator of the Fair Fund established for the $65,000,000 that Robinhood Financial had agreed to pay on December 17, 2020.
The Fair Fund will be used to distribute the $65,000,000 among harmed investors.
SEC Charges Ubong Uboh and Tyler Crockett for Using a Call Room to Manipulate Stocks
On April 20, 2021, the Securities and Exchange Commission (the “SEC”) filed charges against Ubong Uboh and Tyler Crockett for soliciting investors to purchase shares of several microcap issuers from a call room in Miami, Florida.
Five Individuals Charged in Fraud Stock Offering, Stock Manipulation and Money Laundering Scheme
On Wednesday, April 14, 2021, five Individuals were indicted for a stock manipulation/money laundering scheme involving a private oil and gas company and two public Issuers, OrgHarvest Inc (“ORGH”) and ERF Wireless Inc (“ERFB”).
The five-count indictment filed in federal court in Brooklyn charged Richard Dale Sterritt, Jr (“Sterritt”), Michael Greer (“Greer”), Robert Magness (“Magness”), Mark Ross (“Ross”) and Robyn Straza (“Straza”) with conspiracy to commit securities fraud, wire fraud and money laundering, among other offenses.
Six Individuals Charged with a Multi-Million Dollar Scheme to Peddle Fraudulent Stocks
On Wednesday, April 7th, six South Florida residents were indicted by a federal grand jury on charges that they defrauded investors of approximately $21 million by falsely claiming that the investors’ money would go towards the development of a lucrative mobile gaming application that, in reality, never launched and generated no revenues. The fraud scheme operated out of Broward and Palm counties and target victim investors across the country using telephone sales rooms, also commonly known as “boiler rooms”.
Direct Public Offering Attorneys, DPO, Go Public Direct
Most small private companies are unable to find an underwriter prior to going public. A direct public offering (“Direct Public Offering”) provides a viable solution to these companies. Using a Direct Public Offering to go public direct can allow the company to sell its shares directly to investors without the use of an underwriter. With a Direct Public Offering, the company typically files a registration statement with the Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Securities Act”), typically on EC Form S-1 or F-1
A Form S-1 registration statement can be used by a company to register securities on its own behalf in an initial public offering, register securities on behalf of its selling security holders in a secondary offering or both to register securities on its own behalf as well as for selling security holders.
Using a Direct Public Offering and Form S-1 to Go Public Direct
All issuers qualify to file a registration statement on Form S-1 and it is the most common registration statement form used in going public transactions. Filing a registration statement in connection with a going public transaction eliminates many of the risks and expenses associated with reverse mergers including among other things, undisclosed liabilities, sketchy corporate records, DTC Chills, Global Locks and SEC trading suspensions. Read More
SEC Cleans up OTC Markets – SEC Trading Suspension of 71 Penny Stocks
On February 14, 2021, we published an article alerting the public about what we calculated to be the start of a new initiative by the Securities and Exchange Commission (“SEC”) to reign in the market manipulation of no information stocks through Social Media.
Since that article, the SEC has suspended 70 more stocks, in addition to the SpectraScience Inc (SCIE) suspension that kicked off the string of activity.
