SEC Obtains Final Judgments Against Mathias Francisco Sandoval and Maria Cidre, Former General Cable Corp, CEO and Former CFO of General Cable Corp.
On February 20, 2019, the U.S. District Court for the Southern District of Florida entered final judgments on consent against Mathias Francisco Sandoval Herrera and Maria D. Cidre, the former Chief Executive Officer and former Chief Financial Officer, respectively, of the Rest of World operating segment of General Cable Corp.
The SEC’s complaint, filed on January 24, 2017, alleged that Mathias Francisco Sandoval and Maria Cidre learned in January 2012 of an inventory overstatement and related accounting errors at General Cable’s subsidiary in Brazil. The complaint alleged that, over the course of 2012, the estimated overstatement grew to tens of millions of dollars. Instead of disclosing the overstatement pursuant to General Cable’s policies and system of internal controls, the complaint alleges that Mathias Francisco Sandoval and Maria Cidre concealed the errors by omitting them from required reports and making false certifications to executive management. Read More
Restricted Legends, Removal Requirements, Rule 144 for Shells – Tradability Legal Opinions
The Securities Act of 1933, as amended (the “Securities Act”) does not require that issuers place restricted legend (“Restricted Legends” or “Restrictive Legend“) on certificates representing restricted securities. It has become routine for public companies and private companies seeking to go public to place Restricted Legends on certificates. It is also common practice for an issuer’s transfer agent to require that the issuer place Restricted Legends on stock certificates representing restricted securities. Restricted Legends provide notice to shareholders as well as to third parties that the securities represented by the stock certificate cannot be resold unless registered under the Securities Act or an exemption from registration is available. To remove the restricted legend, the issuer and/or its transfer agent will require a tradability legal opinion.
Rule 163B and Testing the Waters
On February 19, 2019, the SEC posted a new proposed rule intended to make it possible for all issuers to “test the waters” when contemplating a public offering of securities. Until now, only issuers considered emerging growth companies (EGCs) under the JOBS Act of 2012 qualified to solicit investor interest prior to a registered public offering. An EGC is defined as an issuer with “total annual gross revenues of less than $1.07 billion during its most recently completed fiscal year and, as of December 8, 2011, had not sold common equity securities under a registration statement”. A company continues to be an emerging growth company for the first five years after it completes an Initial Public Offering (“IPO”). Its status will change only if its gross revenues exceed the $1.07 billion threshold, if it has issued more than $1 billion in non-convertible debt, or it becomes a large accelerated filer.
In addition being allowed to test the waters—with the object of gauging investor interest in an initial public offering (IPO)—the JOBS Act conferred other advantages on EGCs, most of them having to do with less stringent SEC Reporting Requirements in quarterly and annual reports. Another benefit enjoyed by these fledgling companies was the ability to file draft registration statements with the SEC confidentially. When an EGC files a confidential initial registration statement, the filing itself is not made available to the public, and the review process is between the company and the SEC’s Division of Corporation Finance. The original submission and subsequent amendments need not be made public until 15 days prior to the start of the company’s road show. Read More
SEC Files Charges against Joshua Sason in Elaborate Microcap Stock Fraud
On February 15, 2019 the SEC announced charges against four individuals and related businesses for their roles in two microcap frauds and unlawful securities offerings. In sum, the alleged illegal transactions resulted in proceeds of more than $25 million.
According to the SEC’s complaint, from approximately December 2012 to June 2013, microcap stock financier Magna Group, which was founded and owned by Joshua Sason, engaged in a scheme to acquire fake convertible promissory notes supposedly issued by penny stock issuer Lustros Inc. and then to convert those notes into shares of Lustros common stock. The defendants then sold the shares to unsuspecting retail investors, who did not know that the shares were fraudulently acquired and were being sold illegally. The defendants’ sales of the Lustros shares also had the effect of destroying the value of the Lustros shares held by the public. The complaint alleges that Marc Manuel, Magna Group’s former head of research and due diligence, personally negotiated and executed the sham transactions. Read More
SEC Charges Cognizant and Two Former Executives With FCPA Violations
On February 15, 2019, Cognizant Technology Solutions Corporation has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act, and two of the company’s former executives were charged for their roles in facilitating the payment of millions of dollars in a bribe to an Indian government official.
The SEC’s complaint alleges that in 2014, a senior government official of the Indian state of Tamil Nadu demanded a $2 million bribe from the construction firm responsible for building Cognizant’s 2.7 million square foot campus in Chennai, India. As alleged in the complaint, Gordon Coburn, Cognizant’s President, and Steven E. Schwartz, the company’s Chief Legal Officer, authorized the contractor to pay the bribe, and directed their subordinates to conceal the bribe by doctoring the contractor’s change orders. The Commission also alleges that Cognizant authorized the construction firm to make two additional bribes totaling more than $1.6 million. Cognizant allegedly used sham change order requests to conceal the payments it made to reimburse the firm. Read More
Can Finders Raise Money Q & A – Going Public Lawyers
Posted By Brenda Hamilton, Securities Lawyer
It is not unusual for a private or public company to be approached by a person (“Finder”) who offers to locate investors in exchange for a success fee. Most finders are not registered as broker-dealers with the Securities and Exchange Commission (“SEC”) or Financial Industry Regulatory Authority (“FINRA”). The possibility of receiving capital, even through the efforts of a Finder creates a tempting opportunity for issuers going public in need of capital. Matching companies with investors can be a lucrative proposition for the Finder. While it may seem harmless, the SEC does not think so and in fact, the SEC frequently brings cases against unregistered Finders and those who aid and abet them. This Q & A addresses common questions we receive from our clients about Finders. Read More
SEC Charges Former Executives of Lucent Polymers, a Plastics Manufacturer with Fraud
On February 12, 2019, the SEC charged two former high-ranking executives, of an Indiana-based plastics manufacturer with concealing from potential buyers of the manufacturer the fact that the company’s core business model was a sham.
According to the SEC’s complaint, Lucent Polymers, Inc. premised its business model on its ability to transform “garbage to gold” – that is, to use low-grade, non-prime feedstock to develop high-quality plastics. The company’s near-magic “garbage to gold” process, the SEC alleges, was a huge commercial success. However, the complaint alleges that Lucent’s business model was a fraud. The complaint alleges that the company routinely lied to its customers and falsified its certifications of test data to show that its products complied with customer specifications, including on important aspects such as fire-retardant measures, when in fact the products did not meet customer specifications. Read More
Court Imposes Lifetime Officer-And-Director Bars On Michael J. Kipp, Swisher’s former CFO, and Joanne K. Viard
A federal district court has permanently barred two former corporate officers of a North Carolina-based hygiene and sanitation company from serving as officers or directors of public companies.
The SEC charged the two officers of Swisher Hygiene, Inc., Michael J. Kipp, Swisher’s former CFO, and Joanne K. Viard, Swisher’s former Director of External Reporting, in 2016 with fraud for participating in an earnings management scheme.
The SEC’s complaint alleged that, during the second through fourth quarters of 2011, Michael Kipp took advantage of Swisher’s ineffective internal controls and directed his accounting group to change various acquisition-related reserves and expenses to increase earnings to predetermined targets. The complaint alleged that Joanne Viard identified potential acquisition-related entries that could be reclassified to meet earnings targets, and made various adjusting entries in Swisher’s accounting records without adequate justification or support. In a parallel action, Michael Kipp and Joanne Viard were charged criminally and were sentenced to 54 and 24 months imprisonment, respectively. Read More
SEC Obtains Final Judgment Against Niket Shah in Ponzi Scheme Targeting Retail Investors
The SEC obtained a final judgment on February 8, 2018, against Niket Shah, a New Jersey resident who was charged last year by the agency with stealing more than $250,000 in a Ponzi scheme in which his friends and coworkers invested.
The court’s final judgment follows the court’s grant of summary judgment in the agency’s favor. In granting summary judgment, the court found that Niket Shah and his company, Spark Trading Group LLC, falsely claimed that Spark Trading was registered with the SEC; that their investments were profitable; that investors’ funds were guaranteed; and that defendants received $250,000 in start-up capital, including $200,000 that Shah deposited into a binary options trading account. Read More
The Cato Institute Files Action Challenging SEC Gag Orders
On January 9, the Cato Institute filed suit against the Securities & Exchange Commission (the “SEC”), its chairman Jay Clayton, and its secretary Brent J. Fields. For decades, questions have been raised, and criticisms offered, of the SEC’s longstanding practice of requiring (or allowing, depending on one’s point of view) settling defendants in enforcement actions to sign consent decrees in which they “neither admit nor deny” the charges lodged against them. Thanks to a standard clause in their decrees, for the rest of their lives, the defendants will be prevented from explaining what really happened, if their views don’t coincide with the agency’s. These strictures apply to corporate as well as individual defendants.
The Cato Institute believes these SEC Gag Orders are wrong. Cato is a libertarian think tank located in Washington, D.C. It was founded in 1974 in Wichita, Kansas, as the Charles Koch Foundation, and was at first wholly funded by Koch. It’s by now considered one of the most influential think tanks in the world. Cato is not a public company, and is not regulated by the SEC. Ordinarily, it would have lacked standing to sue the agency, but thanks to special circumstances, it was able to file a complaint for declaratory and injunctive relief. Read More
SEC Charges Robert Alexander, Founder of Online Gaming Company for Defrauding Investors
On February 7,2019, the SEC charged Robert Alexander with fraudulently raising approximately $9 million from more than 50 individuals by selling investments in Kizzang LLC, a purported online gaming business.
According to the SEC’s complaint, among other misrepresentations, Robert Alexander told investors that they would make a minimum of ten times their investment, Robert Alexander had personally invested millions of dollars in Kizzang, Robert Alexander had made a $50 million charitable donation, and that he had led the creation of a prominent video game. Rather than using investor funds for Kizzang’s business, Robert Alexander stole at least $1.3 million, including spending more than $450,000 on gambling sprees. Robert Alexander also used investor funds to finance his daily living and other personal expenses, including credit card bills, shopping and entertainment, and expenses for his daughter, including culinary school tuition and luxury car payments. Read More
Form F-1 Foreign Private Issuers and Going Public
A foreign private issuer going public can register an offering of securities under the Securities Act of 1933 (Securities Act) or may register a class of equity securities under the Securities Exchange Act of 1934 (Exchange Act), or both. In either case, the issuer must file a registration statement containing information required by the Security and Exchange Commission (SEC), and must become effective. Under the Securities Act, a registration statement contains a prospectus, along with other information required by the SEC’s regulations.
The SEC has adopted a series of forms available to foreign private issuers consisting of the “F” series registration statements and Forms 20-F and 6-K disclosure forms for annual and current reports. The disclosure forms available to foreign private issuers have been designed with reference to international disclosure standards, both in scope and timing requirements for filing. Most foreign private issuers opt to file under those forms instead of the forms available to domestic issuers. Read More
When is a Form S-1 Confidential? Going Public Securities Lawyers
Form S-1 is a common part of the going public process. In some circumstances Form S-1 filings can remain confidential prior to effectiveness. This Q&A discusses common questions we receive about confidential submissions on Form S-1.
Q. When does an emerging growth company have to file its Form S-1 registration statement if it wants the submission to be confidential?
A. The JOBS Act requires that emerging growth companies file the initial confidential submission of its Form S-1 Registration Statements and all amendments with the SEC within 21 days prior to the anticipated effectiveness of the registration statement or road shows. These prior confidential submissions should be included as exhibits to the company’s later publicly filed registration statement, if any. This applies to both public companies and companies involved in going public transactions. Read More
Scottsdale and John Hurry Push Back to Stop FINRA Investigation
On December 17, 2018, John Hurry broker dealer, Scottsdale Capital Advisers Corporation sued the Financial Industry Regulatory Authority (“FINRA”), for breach of contract in the U.S. District Court for the District of Columbia. Scottsdale and its sister company, Alpine Securities, Inc., are broker-dealers controlled by John Hurry and his wife Justine Hurry. Both companies are FINRA members. Both John and Justine Hurry are registered brokers regulated by FINRA.
The complaint alleges that FINRA has breached its agreement with and obligations to member firms by its “increasing and current failure to provide fair and meaningful representation” to them, and by taking “affirmative acts that have the effect if not the purpose of burdening competition, harming not only member firms but also issuers and customers.” Broadly, Scottsdale is saying that rather than help small securities firms, it’s unfairly attacking and damaging them:
Through… improper enforcement efforts, FINRA has… engaged in “unfair discrimination” against certain of its members in violation of its governing statute and By-Laws. It has aggressively targeted and sought to punish or even eliminate specific segments of the securities market. Through its coercive actions against smaller member firms who are engaged in the microcap and low-priced securities business, FINRA has gotten to the point that it is gutting the ability of firms, issuers and investors to participate in that market. Read More
Form F-1 Registration Statement Requirements, Filling, Effectiveness, Going Public
Typically, foreign companies seeking to raise capital attempt to obtain public company status. Foreign companies that go public in the U.S. can register shares with the Securities and Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”) or register a class of securities pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”).
Foreign private issuers going public should consider Form S-1 filing requirements when contemplating their securities offering. Private companies seeking to raise capital often file a registration statement on SEC Form F-1 to meet certain requirements of the Financial Industry Regulatory Authority when going public. Upon filing, a Form S-1 is reviewed by the Securities and Exchange Commission, who may render SEC Comments. Once a Form S-F is declared effective by the SEC, the company becomes subject to scaled down SEC reporting requirements. Unlike a Form 10 registration statement which registers a class of securities, Form F-1 registers specific securities offerings or transactions and it does not become effective until all SEC comments have been resolved. Private companies going public should be aware of the expansive disclosure required in registration statements filed with the SEC prior to making the decision to go public.
Like domestic issuers, foreign companies have access to several means of raising capital during the going public process. A direct public offering (“Direct Public Offering”) allows an issuer to raise capital by selling securities directly to investors without the use of an underwriter. The Direct Public Offering for a foreign company involves registering a securities offering with the SEC, typically on a Form F-1 registration statement. Read More
What is a SEC Registration Statement? Going Public Lawyer
The Securities Act of 1933 (the “Securities Act”) is referred to as the “truth in securities” act. The Securities Act has two stated goals. These are to require that issuers provide investors with financial and other significant information concerning securities being offered for public sale, and to prohibit deceit, misrepresentations, and other fraud in the sale of securities. The primary way companies provide investors with financial and other significant information when going public is by filing a registration statement with the Securities and Exchange Commission (the “SEC”). This provides transparency to investors and protects the issuer from liability. Read More
Due Diligence in Accredited Crowdfunding Offerings – Securities Lawyer 101
The Anti-Fraud Provisions That Apply to Accredited Crowdfunding
Even though Accredited Crowdfunding Offerings are exempt under Rule 506(c) and no specific disclosure requirements apply, under most circumstances, the anti-fraud provisions mandate disclosure of certain information to investors. Section 10(b) of the Securities Exchange Act of 1934, (the “Exchange Act”) prohibits the use of any manipulative or deceptive device in contravention of the Securities & Exchange Commission’s rules and regulations. Rule 10b-5, was adopted pursuant to Section 10(b), and prohibits fraudulent devices and schemes, material misstatements and omissions of any material facts, and acts and practices that operate as a fraud or deceit on any person in connection with the purchase or sale of a security. Read More
SEC Files Subpoena in Possible Market Manipulation Scheme
The SEC filed a subpoena enforcement action against three penny-stock companies and their CEO – Cherubim Interests, Inc., PDX Partners, Inc., Victura Construction Group, Inc., and Patrick Jevon Johnson – seeking an order directing them to comply with investigative subpoenas for documents.
According to the SEC’s application, filed on December 21, 2018 in U.S. District Court for the Central District of California, the SEC is investigating whether certain individuals or entities engaged in a potential pump-and-dump scheme in the stock of Cherubim Interests, PDX Partners, Inc, and Victura Construction Group, Inc. Because the SEC was concerned about the accuracy of the companies’ disclosures, the SEC suspended trading in their securities on February 15, 2018 for ten business days. Based on its ongoing investigation, the SEC has reason to believe that each company issued false public statements in January 2018 to “pump” their stock price, claiming that it had acquired hundreds of millions of dollars of “AAA-rated” assets, even though each company appeared to have little to no assets. After the stock price and trading volume for each company increased as a result of the news, an entity associated with the companies may have “dumped” their overvalued shares for significant profits. Read More
SEC Charges Taiwan-Based Insurance, China United with Fraudulent Market Manipulation Scheme
A Taiwan-based insurance company, China United Insurance Service, Inc. and one of its former managers have agreed to settle fraud charges brought by the SEC relating to a scheme to manipulate the company’s trading volume.
The complaint alleges that, from approximately December 2013 through March 2018, China United Insurance Service, Inc. and Cheng-Hsiung Huang schemed to deceive the investing public and Nasdaq, for the purpose of obtaining a listing on Nasdaq, that the trading volume in the company’s stock was derived from bona fide market activity. Cheng-Hsiung Huang, acting on the company’s behalf, used multiple brokerage accounts to engage in numerous transactions in the company’s stock. When Cheng-Hsiung Huang’s trading was flagged by a U.S.-based brokerage firm for high volume and possible prearranged trading and several of the accounts were frozen, Cheng-Hsiung Huang and two colleagues contacted the brokerage firm and lied about their identities, their relation to China United, and their reasons for trading. Read More
SEC Obtains Judgment Against Former CEO John Place
On November 9, 2018, the SEC obtained a judgment against John Place, a former CEO of a brokerage consulting business who was charged by the SEC in August for his role in a multimillion dollar transition management fraud.
The SEC previously charged a brokerage consulting business known as GTS along with three of its former officers, including former CEO John Place, for misleading current and prospective customers about the fees the business charged in connection with securities transactions. According to the SEC’s complaint, John Place and other GTS officers told many of their customers that GTS would receive only clearly disclosed commissions charged on customers’ trades. In reality, GTS also received additional revenue from mark-ups and mark-downs charged by other brokers. Read More
SEC Obtains Asset Freeze Against Former Thomas Laws CEO Charged with Misappropriating Investor Funds
The SEC announced on December 14, 2018 charges against Thomas Laws, the former CEO of Santa Fe Gold Corporation, for the misappropriation of investor funds. The SEC also obtained an asset freeze against Thomas Laws.
The SEC’s complaint, unsealed on December 6, 2018, alleges that, from at least August 2016 through February 2018, Santa Fe Gold, a public mining company based in Albuquerque, New Mexico, transferred approximately $1.1 million in investor funds to Thomas Laws and THL Financial Services Corporation, an entity controlled by Thomas Laws, for various corporate purposes, including the purchase of a silver mine and mining equipment and for third party services. According to the complaint, Thomas Laws misappropriated the funds and attempted to hide his theft from the company and its independent auditor by fabricating documents, including vendor invoices, agreements, bank records, and communications. Read More
SEC Sues Orange County Investment Adviser, Craig Arsenault for Defrauding Clients
On December 14, 2018 the SEC charged Craig Arsenault, a California investment adviser with misappropriating client funds and misleading his clients about how their money was invested and how their investments were performing. The SEC is seeking an asset freeze and the appointment of a receiver to prevent any ongoing misappropriation or dissipation of assets.
The SEC’s complaint alleges that Craig Arsenault defrauded clients of his advisory firm, Atlas Capital Management, Inc., who had invested $5.7 million in a company he controlled, ACT Global Investments. According to the complaint, Craig Arsenault solicited investments in Atlas Capital Management, telling his advisory clients that their funds would be used to make secured loans to doctors for the purpose of acquiring medical equipment. The complaint alleges that Craig Arsenault and ACT used client funds instead to make unsecured loans to, for example, a used car dealership, and to acquire undeveloped real estate. As alleged in to the complaint, Craig Arsenault then provided clients with deceptive account statements that made it appear as if these investments were generating substantial income when they were not. The SEC also alleges that he misappropriated and misused over $1 million of the client money invested in Atlas Capital Management. Read More
SEC Obtains Final Judgment Against Gregory Webb, a Chicago Tech Executive
The SEC has obtained a final judgment against Gregory Webb, the former Chairman and CEO of a company purportedly in the homeland security business.
In October 2011, the SEC charged Gregory E. Webb, the Chairman and CEO of InfrAegis, Inc., and InfrAegis, with conducting a fraudulent, unregistered offering that raised over $20 million from at least 395 investors nationwide. According to the SEC’s complaint, Gregory Webb and InfrAegis made false and misleading claims about the company’s commercial success and the existence of contracts for the installation of InfrAegis’ products. Read More
Rule 506 Offerings FAQ By: Brenda Hamilton Attorney
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
Form 10 v Form S-1 Registration Statements – Going Public
Form S-1 and Form 10 each provide unique benefits in the going public process. Additionally, Form S-1 and Form 10 require similar disclosures. A company can voluntary file a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) and/or the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Form S-1 is most commonly used registration statement form under the Securities Act. Form S-1 registration statements provide issuers with flexibility in going public transactions. A registration statement on Form S-1 can be used to register specific securities for a company to sell to investors and specific shares for the company’s shareholders to resell publicly. Form S-1 can be used to register both simultaneously. Form S-1 registration statements can be used for a Direct Public Offering (“DPO”) or Initial Public Offering (“IPO”) and can be structured a variety of way depending upon the particular transaction.
Using Form S-1, the issuer or its shareholders are able to sell unrestricted securities and if structured properly, qualify for a ticker symbol assignment by the Financial Industry Regulatory Authority (“FINRA”) Read More
Regulation A+ Q&A
Since Regulation A+ was adopted in 2015, it has gained notable market acceptance. Regulation A+ provides an offering that can be used in combination with direct public offerings and initial public offerings as part of a Going Public Transaction allowing the issuer to avoid the risks of reverse merger transactions. Regulation A+ simplifies the process of obtaining the seed stockholders required by the Financial Industry Regulatory Authority (“FINRA”) while allowing the issuer to raise initial capital. This blog post addresses the most common questions we receive about Regulation A+.
How much can I raise with Regulation A+?
Tier 1 of Regulation A+ is available for offerings of securities of up to $20 million in a 12- month period, with no more than $6 million in offers by selling security- holders that are affiliates of the issuer. Tier 2 is available, for offerings of securities of up to $50 million in a 12-month period, with no more than $15 million in offers by selling security-holders that are affiliates of the issuer. Read More
Regulation A+ , Going Public and Secondary Trading
The Securities & Exchange Commission’s amendments to Regulation A known as Regulation A+ went into effect on June 19, 2015. Regulation A+ has gained market acceptance not only by issuers quoted on the OTC Markets but also by the New York Stock Exchange (“NYSE”) and NASDAQ Stock Market as an effective means of raising capital and going public.
A sometimes overlooked aspect of Regulation A+ is the impact of Blue Sky laws on secondary trading and liquidity. State Blue Sky laws are applicable to secondary trading and vary from state to state. From a practical perspective, it is important for a company looking to raise capital to offer liquidity to investors and facilitate secondary trading.
The trading of securities of issuers listed on National Securities Exchanges like the NASDAQ Stock Market and the NYSE are exempt from State Blue Sky laws that govern secondary trading; however, other companies such as those on the OTC Markets platform must comply with State Blue Sky laws for both their Regulation A+ Offerings and secondary sales. Read More
Form S-1 Registration Statement Filings – Securities Lawyers – Going Public
Form S-1 registration statement filings remain widely used by companies seeking to raise capital and go public even after the enactment of Regulation A. Form S-1 registration filings are the most commonly used registration statement form. The flexibility and benefits of a Form S-1 filing allows for a variety of structures in securities offerings and going public transactions. All companies qualify to register securities on a Form S-1 registration statement. Private companies going public should be aware of the expansive disclosure required in registration statements filed with the SEC prior to making the decision to go public. A Form S-1 registration statement on Form S-1 has two principal parts which require line item disclosures. Part I of the registration statement is the prospectus, which requires that the company provide to Investors certain disclosures about its business operations, financial condition, and management. Part II contains information that doesn’t have to be delivered to investors.
This blog post provides a summary of the sec disclosures and reporting requirements related to Form S-1 registration statement filings. Read More
SEC Files Subpoena Enforcement in Possible Market Manipulation Scheme
The SEC filed a subpoena enforcement action against NVC Fund LLC and its principal, Frank Ekejija, seeking an order directing them to comply with an investigative subpoena for documents and testimony.
According to the SEC’s application, filed on November 30, 2018 in U.S. District Court for the Central District of California, the SEC is investigating whether certain individuals or entities engaged in a potential pump-and-dump scheme in the stock of three penny-stock companies, Cherubim Interests, Inc., PDX Partners, Inc., and Victura Construction Group, Inc. Because the SEC was concerned about the accuracy of the companies’ disclosures, the SEC suspended trading in their securities on February 15, 2018 for ten business days. Based on its ongoing investigation, the SEC has reason to believe that each company issued false public statements in January 2018 to “pump” their stock price, claiming that NVC Fund owns “trillions” of dollars in “AAA-rated” assets, and that each company acquired hundreds of millions of dollars of these assets from NVC Fund. After the stock price and trading volume for each company increased as a result of the news, an entity associated with the companies may have “dumped” their overvalued shares for significant profits. Read More
The SEC Declared A Cease and Desist Proceedings with CoinAlpha Advisors LLC.
On December 7, 2018, CoinAlpha Advisors LLC submitted an Offer of Settlement, which the SEC has determined to accept. CoinAlpha Advisors LLC consented to the Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order.
CoinAlpha Advisors LLC is a Delaware limited liability company with its principal place of business in Sunnyvale, California. CoinAlpha Advisors LLC was formed in July 2017 to act as the managing member of and manager to CoinAlpha Falcon LP. They has never been registered with the SEC in any capacity.
CoinAlpha Falcon LP is a Delaware limited partnership with its principal place of business in Sunnyvale, California.They has never been registered with the SEC in any capacity. A total of 22 investors invested a total of $608,491 in CoinAlpha Falcon. In October 2018, after being contacted by the SEC, CoinAlpha Advisors LLC unwound the CoinAlpha Falcon, pursuant to the authority granted in CoinAlpha Falcon’s Limited Partnership Agreement. Read More
