Who Is Eligible for Regulation A + Offerings? Posted by Brenda Hamilton, Securities Lawyer

Regulation A

A correctly designed Regulation A Offering Program can minimize your financial risk and significantly enhance your ability to raise money, but not how you may think.  Both issuers and selling shareholders can benefit from Regulation A+.  A few of the many benefits of Regulation A+ include:

  • You can aggressively advertise your Regulation A offering over social media and elsewhere in all 50 states BEFORE you spend any money to prepare and file a Form 1-A.  As a side note, you may want to consider a small Crowdfunding Regulation CF offering to start as that will tell you accurately whether potential investors will actually buy your stock at the price you set, which you cannot do under A+
  • You do not have to register your A+ offering by making separate state “Blue Sky” filings, meaning you are free to advertise sell your A+ Offering in all 50 states, even in states that have “merit review.” An S-1 offering, on the other hand, requires separate registrations in every state where you want to sell, practically impossible. Think how well this A+ Offering structure works if you want to sell stock from your website not only to potential investors but also to your customers or visitors to your website!

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What is a NYSE Control Company Anyway? NYSE Attorneys

NYSE Control Company Exemption

Public Companies that qualify as a “Controlled Company” with securities listed on the Nasdaq Stock Market (NASDAQ) or the New York Stock Exchange (NYSE), must comply with the exchange’s continued listing standards to maintain their listings. Nasdaq and the NYSE have adopted qualitative listing standards.  Companies that do not comply with these corporate governance requirements may lose their listing status.

Under the Nasdaq and NYSE rules a “controlled company” is a company with more than 50% of its voting power held by a single person, entity or group. Under NYSE and Nasdaq rules, a controlled company is exempt from certain corporate governance requirements including:  Read More

Regulation A+ -v- Form S-1 Registration By: Regulation A Attorneys

Regulation A v Form S-1

Almost three years ago, the SEC radically changed Regulation A for smaller companies desiring to raise money by going public.  This seismic shift is called Regulation A+.  In this blog post, we will explain how new Regulation A+ can work for you, making it easier to raise money and significantly lowering costs of going and staying public.

However, let’s first examine just how Regulation A+ changed the Raising Money world compared to the filing a Registration Statement on Form S-1.

A correctly designed A+ Offering Program can minimize your financial risk and significantly enhance your ability to raise money, but not how you may think.  The disclosure standards and SEC review process for A+ and S-1 are essentially the same.  But there are other significant differences, as follows.:

  • You can aggressively advertise your offering over social media and elsewhere in all 50 states BEFORE you spend any money to prepare and file a Form 1-A, which is the Regulation A+ equivalent of Form S-1. This is discussed in detail in “Testing the Waters” in this blog post.  You cannot do this in an S-1 offering.  As a side note, you may want to consider a small Crowdfunding Regulation CF offering to start as that will tell you accurately whether potential investors will actually buy your stock at the price you set, which you cannot do under A+
  • You do not have to register your A+ offering by making separate state “Blue Sky” filings, meaning you are free to advertise sell your A+ Offering in all 50 states, even in states that have “merit review.” An S-1 offering, on the other hand, requires separate registrations in every state where you want to sell, practically impossible. Think how well this A+ Offering structure works if you want to sell stock from your website not only to potential investors but also to your customers or visitors to your website!
  • All the securities you sell in you’re A+ Offering are fully non-restricted free-trading, just like those in an S-1 Offering.
  • You can sell to both Accredited and Non-Accredited Investors without securing independent verification of investor financial status just like an S-1 Offering. For Non-Accredited Investors, there’s a 10% income/net worth limitation.
  • With A+, you only have two on-going SEC filings per year rather than four under S-1.
  • Although you have to do audits with an A+ Offering, you do not have to use an expensive PCAOB audit firm but only a competent CPA firm. On-going SEC reporting does not require PCAOB audit firms after going public.
  • With A+, you are not subject to the Proxy Rules and your Stockholders are not subject to Ownership Reporting Rules.
  • Even with these reduced on-going reporting requirements you can secure a qualification for quotation of your securities on OTC Market’s OTCQB, just like with an S-1.

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 or by email at [email protected].   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.

SEC Charges Marc Tager and Jersey Consulting with Defrauding Investors in “Soil Remediation” Scam

The SEC's complaint, filed in federal district court in Salt Lake City, Utah, alleges that, since September 2014, Marc Andrew Tager of Utah and his company, Jersey Consulting LLC, have engaged in the fraudulent offering of unregistered Jersey securities and employed paid telemarketers to raise at least $6 million from investors located across the U.S. None of the telemarketers-Suzanne Aileen Gagnier, Kenneth Stephen Gross, Jeffrey Rowland Lebarton, and Jonathan Edward Shoucair-are registered to sell securities. According to the complaint, Jersey investors were promised extraordinary returns of 100% or more within 12 months from the application and licensing of Jersey's "soil remediation" technology, and were misled about the commercial viability of Jersey's technology and Jersey's purported rights to a "mineral rich" claim in Arizona. Jersey in fact had no rights to the claim and its technology was not commercially viable. Jersey also failed to disclose Tager's prior felony conviction and that investor funds were diverted to pay for Tager's personal expenses, including the purchase of a Harley-Davidson motorcycle.The Securities and Exchange Commission announced charges against Marc Andrew Tager and Jersey Consulting LLC, a Utah-based company and several solicitors of the company’s securities in an ongoing offering fraud that has already targeted more than 80 individual investors.

The SEC’s complaint, filed in federal district court in Salt Lake City, Utah, alleges that, since September 2014, Marc Andrew Tager of Utah and his company, Jersey Consulting LLC, have engaged in the fraudulent offering of unregistered Jersey securities and employed paid telemarketers to raise at least $6 million from investors located across the U.S. None of the telemarketers-Suzanne Aileen Gagnier, Kenneth Stephen Gross, Jeffrey Rowland Lebarton, and Jonathan Edward Shoucair-are registered to sell securities. According to the complaint, Jersey investors were promised extraordinary returns of 100% or more within 12 months from the application and licensing of Jersey’s “soil remediation” technology, and were misled about the commercial viability of Jersey’s technology and Jersey’s purported rights to a “mineral rich” claim in Arizona. Jersey in fact had no rights to the claim and its technology was not commercially viable. Jersey also failed to disclose Tager’s prior felony conviction and that investor funds were diverted to pay for Tager’s personal expenses, including the purchase of a Harley-Davidson motorcycle. Read More

SEC Charges Beaufort Securities for Manipulative Trading in Microcap Penny Stocks

On March 2, 2018, the Securities and Exchange Commission announced securities fraud charges against a U.K.-based broker-dealer and its investment manager in connection with manipulative trading in the securities of HD View 360 Inc., a U.S.-based microcap issuer.  The SEC also announced charges against HD View's CEO, another individual, and three entities they control for manipulating HD View's securities as well as the securities of another microcap issuer, West Coast Ventures Group Corp.  On March 2, 2018, the Securities and Exchange Commission The SEC announced securities fraud charges against Beaufort Securities, a U.K.-based broker-dealer and its investment manager in connection with manipulative trading in the securities a U.S.-based microcap issuer.  The SEC also announced charges against HD View’s CEO, another individual, and three entities they control for manipulating HD View’s securities as well as the securities of another microcap issuer, West Coast Ventures Group Corp.  The SEC further announced the institution of an order suspending trading in the securities of HD View.  The SEC also announced charges against HD View’s CEO, another individual, and three entities they control for manipulating HD View’s securities as well as the securities of another microcap issuer, West Coast Ventures Group Corp.  The SEC further announced the institution of an order suspending trading in the securities of HD View.

These charges arise in part from an undercover operation by the Federal Bureau of Investigation, which also resulted in related criminal prosecutions against these defendants by the Office of the United States Attorney for the Eastern District of New York.

In a complaint filed in the U.S. District Court for the Eastern District of New York, the SEC alleges that Beaufort Securities Ltd. and Peter Kyriacou, an investment manager at Beaufort, manipulated the market for HD View’s common stock.  The scheme involved an undercover FBI agent who described his business as manipulating U.S. stocks through pump-and-dump schemes.  Kyriacou and the agent discussed depositing large blocks of microcap stock in Beaufort accounts, driving up the price of the stock through promotions, manipulating the stock’s price and volume through matched trades, and then selling the shares for a large profit. Read More

Americrude Charged by SEC – Posted by Brenda Hamilton, Securities Attorney

The SEC's complaint alleges that Shezad Akbar used his company, Americrude, Inc., to defraud multiple investors in seven securities offerings that purportedly raised funds to acquire working interests in oil-and-gas prospects. The SEC alleges that Americrude, Akbar, and Daniel Waite, who was Americrude's nominal President, used a combination of cold calls, high-pressure sales pitches, and false and misleading statements to lure investors into Americrude's fraudulent offerings. The defendants misrepresented Americrude's track record, the reserve potential of its oil-and-gas prospects, and its intended use of proceeds from the offerings. Akbar is also alleged to have used an alias to conceal his involvement in the offering fraud and to hide his prior felony convictions from potential investors.On March 8, 2018, the Securities and Exchange Commission charged Americrude, Inc. a Dallas-based oil-and-gas company and two of its executives with defrauding investors out of at least $950,000 through a string of fraudulent oil-and-gas securities offerings.

The SEC’s complaint alleges that Shezad Akbar used his company, Americrude, Inc., to defraud multiple investors in seven securities offerings that purportedly raised funds to acquire working interests in oil-and-gas prospects. The SEC alleges that Americrude, Akbar, and Daniel Waite, who was Americrude’s nominal President, used a combination of cold calls, high-pressure sales pitches, and false and misleading statements to lure investors into Americrude’s fraudulent offerings. The defendants misrepresented Americrude’s track record, the reserve potential of its oil-and-gas prospects, and its intended use of proceeds from the offerings. Akbar is also alleged to have used an alias to conceal his involvement in the offering fraud and to hide his prior felony convictions from potential investors. Read More

SEC Charges Elizabeth Holmes and Theranos Inc – Securities Lawyers

On March 14, 2018, the Securities and Exchange Commission charged Elizabeth Holmes and  Silicon Valley-based private company Theranos Inc., with raising more than $700 million from investors through an elaborate, years-long fraud scheme in which they exaggerated or made false statements about the company's technology, business, and financial performance.  Theranos and Elizabeth Holmes have agreed to resolve the SEC charges against them.  Importantly, in addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake.On March 14, 2018, the Securities and Exchange Commission charged Elizabeth Holmes and  Silicon Valley-based private company Theranos Inc., with raising more than $700 million from investors through an elaborate, years-long fraud scheme in which they exaggerated or made false statements about the company’s technology, business, and financial performance.  Theranos and Elizabeth Holmes have agreed to resolve the SEC charges against them.  Importantly, in addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake.

The SEC complaints allege that Theranos, Elizabeth Holmes, and Balwani made numerous false and misleading statements in investor presentations, product demonstrations, and media articles by which they deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry.  In truth, according to the SEC’s complaint, Theranos’ proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others. Read More

SEC Charges Jon E. Montroll and Bitfunder with Bitcoin Fraud

On February 21, 2018, the Securities and Exchange Commission charged a former bitcoin-denominated platform and its operator with operating an unregistered securities exchange and defrauding users of that Bitcoin exchange. The SEC also charged the operator with making false and misleading statements in connection with an unregistered offering of securities.  The SEC alleges that BitFunder and its founder, Jon E. Montroll, operated BitFunder as an unregistered online securities exchange and defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on BitFunder's system that resulted in the theft of more than 6,000 bitcoins. The SEC also alleges that Montroll sold unregistered securities that purported to be investments in the exchange and misappropriated funds from that investment as well.On February 21, 2018, the Securities and Exchange Commission charged a former bitcoin-denominated platform known as BitFunder and its operator with operating an unregistered securities exchange and defrauding users of that Bitcoin exchange. The SEC also charged the operator with making false and misleading statements in connection with an unregistered offering of securities.

The SEC alleges that BitFunder and its founder, Jon E. Montroll, operated BitFunder as an unregistered online securities exchange and defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on BitFunder’s system that resulted in the theft of more than 6,000 bitcoins. The SEC also alleges that Montroll sold unregistered securities that purported to be investments in the exchange and misappropriated funds from that investment as well in connection with BitFunder. Read More

SEC Charges Niket Shah and Spark Trading for Targeting Retail Investors

On March 23rd the Securities and Exchange Commission announced charges and a preliminary injunction and asset freeze against Niket Shah, a New Jersey resident who stole more than $250,000 in a Ponzi scheme in which his friends and coworkers invested.  Based on investor complaints, the SEC moved quickly to investigate and charge Shah. According to the SEC's complaint, unsealed on March 22, 2018, in federal court in Brooklyn, New York, Shah used Spark Trading Group, LLC to defraud more than 15 investors into contributing hundreds of thousands of dollars to two funds that Shah marketed. Shah obtained investments for the funds by lying about his success as a trader, Spark Trading's returns, and how he intended to use investors' money, including altering financial statements to make the funds appear profitable when they were actually losing money. For instance the complaint alleges that Shah promised investors he would pay them monthly returns and guaranteed against losses. According to the complaint, Shah misused investor money for his own benefit and suffered substantial losses on the amounts actually invested. When investors sought their money back, he lied and said the money had been frozen by government agencies, including the Commission.On March 23rd the Securities and Exchange Commission announced charges and a preliminary injunction and asset freeze against Niket Shah, a New Jersey resident who it alleges stole more than $250,000 in a Ponzi scheme in which his friends and coworkers invested.

Based on investor complaints, the SEC moved quickly to investigate and charge Shah. According to the SEC’s complaint, unsealed on March 22, 2018, in federal court in Brooklyn, New York, Shah used Spark Trading Group, LLC to defraud more than 15 investors into contributing hundreds of thousands of dollars to two funds that Shah marketed. Shah obtained investments for the funds by lying about his success as a trader, Spark Trading’s returns, and how he intended to use investors’ money, including altering financial statements to make the funds appear profitable when they were actually losing money. For instance the complaint alleges that Shah promised investors he would pay them monthly returns and guaranteed against losses. According to the complaint, Shah misused investor money for his own benefit and suffered substantial losses on the amounts actually invested. When investors sought their money back, he lied and said the money had been frozen by government agencies, including the Commission. Read More

EDGAR Filer, Robert W. Murray Sentenced to Two Years in Fitbit Stock Manipulation Scheme

Adesh Tyagi - Final Judgement

On March 9, 2018,  Robert W. Murray was sentenced to two years imprisonment in connection with a scheme to manipulate Fitbit securities through false filings on the SEC’s EDGAR system. Murray pled guilty on November 7, 2017.

The criminal charges against Murray arose from the same conduct alleged in the complaint the SEC filed on May 19, 2017, the same day the criminal charges were announced. According to the SEC’s complaint, Murray allegedly purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a sham company sought to acquire Fitbit’s outstanding shares at a substantial premium. Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100. Murray took steps to conceal his identity and actual location, including using an alias to create an email account and using an IP address registered to a company located in another state.

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