The Securities and Exchange Commission charged two firms and 18 individuals in a scheme to improperly divert new issue municipal bonds to broker-dealers at the expense of retail investors. According to the SEC’s complaint, the defendants – known in the industry as “flippers” – purchased new issue municipal bonds, often by posing as retail investors to [&hel…
Read MoreThe Securities and Exchange Commission charged a cloud communications company and two executives with providing misleading quarterly revenue estimates. The company and executives agreed to pay over $1.9 million in penalties to settle the SEC’s charges. According to the SEC’s order, Sonus Networks Inc.’s former CFO, Mark Greenquist, was aware of red flags whi…
Read MoreSection 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) exempts Rule 506(b)securities offerings from the SEC’s registration requirements when the transactions are by an issuer and do not involve a public offering of securities. Rule 506(b) is frequently used by private companies not engaging in general solicitation and advertising.
Read MoreThe Securities and Exchange Commission announced on Aug. 8, 2018 the filing of insider trading charges against Congressman Christopher Collins, the U.S. Representative for New York’s 27th Congressional District, his son, Cameron Collins, and a third individual, Stephen Zarsky. In a parallel action, the U.S. Attorney’s Office for the Southern District of New…
Read MoreOnce the SEC staff declares your company’s Securities Act registration statement on Form S-1 effective, the company becomes subject to the SEC’s reporting requirements under the Securities Exchange Act of 1934. These rules require your company to file annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K with the SEC on…
Read MoreThe Securities and Exchange Commission announced on July 24, 2018 that New York entrepreneur William Z. (Billy) McFarland, two companies he founded, a former senior executive, and a former contractor agreed to settle charges arising out of an extensive, multi-year offering fraud that raised at least $27.4 million from over 100 investors. The SEC’s complaint…
Read MoreOn July 27, 2018 The Securities and Exchange Commission charged Howard Appel with manipulating the stocks of three microcap companies while on supervised release following his criminal conviction for a prior securities fraud. According to the SEC’s complaint, Howard Appel orchestrated multiple schemes to manipulate the market for trading in shares of Virtua…
Read MoreOn July 26, 2018, the Securities & Exchange Commission (“SEC”) filed a civil injunctive action against John A. Paulsen, a former managing director and fixed income research analyst at a registered broker-dealer, for aiding and abetting a pay-to-play scheme involving the New York State Common Retirement Fund. As alleged in the SEC’s complaint, from…
Read MoreThe Securities & Exchange Commission (SEC) adopted amendments to its definition of a “Smaller Reporting Company” which increases the number of companies that are allowed to provide reduced disclosures to comply with their SEC Reporting Requirements. The effective date of the amendments is September 10, 2018. As a result of the amendments, the definition of a…
Read MoreForm S-1 Risk Factor Disclosures l Securities Lawyer 101 The Securities Act of 1933 is often called the “truth in securities” law. It has two basic objectives: to require that investors receive financial and other important information about securities being offered for sale, and to prohibit deceit, misrepresentation, and other fraud in the sale of [&hellip…
Read MoreSupreme Court Addresses SEC ALJ’s On June 21, 2018 The Supreme Court handed down a ruling in Lucia et al. v. Securities and Exchange Commission; the Commission lost, 7-2. At issue was whether the SEC’s method of appointing administrative law judges (ALJs) was unconstitutional because it was not consistent with the Appointments Clause of the […]
Read MoreForm S-1 is the most commonly used registration statement form. It allows issuers to register various types of offerings and the form can be used by both public and private companies engaged in going public transactions. A registration statement on Form S-1 has two principal parts which require expansive disclosures. Part I of the registration statement is…
Read MoreA private or public company can raise capital in a variety of ways. Traditional sources of capital for companies include loans from financial institutions such as a bank, or from friends and family as well as receivable financing. Companies can also raise capital in going public transactions by selling their securities prior to filing a Form S-1 SEC registra…
Read MoreIssuers filing registration statements using a direct public offering in their going public transactions must comply with the disclosure requirements of Form S-1. These include Item 11A of Form S-1 as set forth below. Form S-1 Item 11A Material Changes If the registrant elects to incorporate information by reference pursuant to General Instruction VII., des…
Read MoreOn May 16, 2018, the Securities and Exchange Commission (“SEC”) charged the owner of a Manhattan-based alternative investment firm with misappropriating close to $6 million in investor funds reserved to finance the construction of an international airport in Belize. The SEC complaint alleges that from 2014 through 2017, Brent Borland, the owner of a Manhatta…
Read MorePrivate companies seeking to raise capital often file a Registration Statement on SEC Form S-1 or Offering Circular on Form 1-A pursuant to Regulation A+ in connection with their going public transaction. Both options have unique benefits. For Example, All companies qualify to register securities on a Form S-1 Registration Statement, while only certain issu…
Read MoreOn April 13, 2018, the Securities and Exchange Commission charged Andrew Kandelapas with making false and misleading statements in the company’s SEC filings and press releases and with manipulating the company’s stock. The SEC’s complaint against Andrew Kandalepas, the CEO of Wellness Center USA, Inc. (Wellness), filed in the U.S. District…
Read MoreOn April 6, 2018, the Securities and Exchange Commission charged Clifton Stanley in a $2.4 million Ponzi scheme and in a related, $1.4 million offering fraud targeting retirees. The SEC’s complaint alleges that, from 2010 to 2017, Clifton Stanley ran a Ponzi scheme through his retirement planning and real estate investment business, The Lifepay Group…
Read MoreOn April 5, 2018, the Securities and Exchange Commission charged Saverio Barbera with tipping his brother and father with material nonpublic information about an upcoming corporate acquisition. The SEC’s complaint, filed in the United States District Court for the Eastern District of New York, alleges that, in 2014, Saverio Barbera (“Barbera̶…
Read MoreOn April 5, 2018, a federal district court in Richmond, Virginia has entered a final judgment against Merrill Robertson, Jr., a former football player charged by the Securities and Exchange Commission with defrauding investors, including coaches he knew from his time playing football for the Fork Union Military Academy and the University of Virginia. The SEC…
Read MoreOn April 18, 2018 the Securities and Exchange Commission charged John Jumper with stealing approximately $5.7 million from a Pennsylvania company’s pension plan. According to the SEC’s complaint filed in federal court in Memphis, Tennessee, on three separate occasions between March 2015 and February 2016, John Jumper stole millions of dollars fro…
Read MoreOn April 4, 2018, the Securities and Exchange Commission charged Michael Scronic with fraud stemming from lies to retail investors about the value of their investments in a Ponzi-like scheme. The SEC alleges that, starting in approximately 2010, Michael Scronic began to raise money from at least 42 friends and acquaintances, many of whom were […]
Read MoreOn April 16, 2018, the Securities and Exchange Commission charged Amrit Chahal with orchestrating an investment scheme over several years. The SEC’s complaint alleges that, from at least February 2015, Amrit Chahal, of Fairfax, Va., used his company, Kane Capital Investment Group, LLC, to fraudulently solicit approximately $1.4 million from about 50 in…
Read MoreOn September 28, 2017, the Securities and Exchange Commission charged William Gennity and Rocco Roveccio with making unsuitable recommendations that resulted in substantial losses to customers and hefty commissions for the brokers. One of the brokers agreed to pay more than $400,000 to settle the charges. Brokers must make recommendations that are compatible…
Read MoreThe going public process involves a number of steps that vary depending on the characteristics of the private company wishing to go public, and whether it will become subject to the Securities and Exchange Commission (“SEC”) reporting requirements. Companies seeking public company status must meet certain SEC requirements before its secur…
Read MoreOn April 10, 2018, the U.S. District Court for the Western District of Washington entered a final judgment against Vincent Cassano for his role in a fraudulent stock promotion scheme. According to the SEC’s complaint, Lidingo Holdings, LLC hired writers like Vincent Cassano to publish hundreds of bullish articles on its clients, which appeared to be in…
Read MoreOn March 27, 2018, the Securities and Exchange Commission (SEC) announced a settled administrative proceeding against broker-dealer J.H. Darbie & Co., Inc., and Robert Y. Rabinowitz, Darbie’s majority owner and CEO. On its surface, the suit is both simple and unexciting: between September 2015 and July 2016, Darbie operated with a net cap…
Read MoreOn April 5, 2018, The Securities and Exchange Commission charged Charlie Chen for making an extraordinarily profitable series of unlawful trades in the securities of Massachusetts-based VistaPrint, N.V. According to the SEC’s complaint, Charlie Chen used private information obtained directly or indirectly from a VistaPrint insider to place illegal trad…
Read MoreOn October 25, 2017, the Securities and Exchange Commission charged Mohammed Rashid, a former senior partner at Apollo Management L.P., with defrauding his fund clients by secretly billing them for approximately $290,000 in personal expenditures, including his family vacations, visits to a hair salon, and purchases of designer clothing and high-end electroni…
Read MoreThe 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…
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