SEC Charges Four Pension Officials for Regulation SHO Violations
On May 19, 2014, the Securities and Exchange Commission (“SEC”) announced charges against four former officials at clearing firm Penson Financial Services for their roles in Regulation SHO violations.
An SEC investigation found that Penson’s securities lending practices intentionally and systematically violated Rule 204 under Reg. SHO. Read More
SEC Suspends Pingify – PGFY – By: Brenda Hamilton Attorney
On May 14, 2014, the Securities and Exchange Commission (the “SEC”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of Pingify International, Inc. (“PGFY”), of Edmonton, Alberta, Canada at 9:30 a.m. EDT on May 14, 2014, and terminating at 11:59 p.m. EDT on May 28, 2014. PGFY is quoted on the OTC Markets OTCQB. Read More
SEC Charges Couch Oil & Gas in $10 Million Scheme
On May 12, 2014, the Securities and Exchange Commission (the “SEC”) filed suit in United States District Court in Dallas, Texas, alleging that, from at least September 2010 through January 2012, Charles O. Couch of Irving, Texas and his company Couch Oil & Gas, Inc. fraudulently raised approximately $9,800,000 from more than 200 investors in two unregistered offerings of oil and gas securities.
The SEC’s complaint alleges that offering documents prepared and distributed by the defendants falsely claimed that investors would receive working interests in oil and gas wells.
According to the SEC, Couch and Couch Oil & Gas retained those working interests and never transferred them to investors. The complaint also alleges that the defendants falsely represented to investors that most or all of their funds would be used to drill and complete the wells and failed to inform them that, among other undisclosed expenses, approximately 30% of their funds would be used to make sales commission payments to unregistered brokers.
The complaint further alleges that the defendants made unsubstantiated and highly inflated projections concerning potential oil and gas production from the wells and falsely portrayed to investors that defendants were experienced and successful at radial jet drilling technology.
The complaint charges Couch and Couch Oil & Gas with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10(b) thereunder. The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, and civil penalties against each defendant.
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 at [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 and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490, Rule 506 private placement offerings and memorandums, Regulation A, Rule 504 offerings, SEC reporting requirements, SEC registration statements on Form S-1 , IPO’s, OTC Pink Sheet listings, Form 10 OTCBB and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or [email protected]. 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
www.SecuritiesLawyer101.com
Telexfree Principal Becomes Fugitive By: Brenda Hamilton Attorney, Boca Raton Florida
On Friday, May 9, 2014, the U.S. Attorney for the District of Massachusetts charged James M. Merrill and Carlos N. Wanzeler with conspiracy to commit wire fraud in connection with the alleged TelexFree pyramid scheme previously charged by the Securities and Exchange Commission. Federal authorities arrested Merrill on Friday, and an arrest warrant was issued for Wanzeler, who the Department of Justice announced is now a fugitive.
The Department of Justice also announced it has executed 37 seizure warrants seizing assets relating to the fraudulent pyramid scheme.
The criminal charges against Merrill and Wanzeler related to the same conduct charged in a civil enforcement action filed by the SEC on Tuesday, April 15, 2014, against Merrill, Wanzeler, and others. Those charges were filed under seal, in connection with the Commission’s request for an immediate asset freeze. That asset freeze, which the U.S. District Court in Boston ordered on Wednesday, April 16, secured millions of dollars of funds and prevented the potential dissipation of investor assets. After the SEC staff implemented the asset freeze, at the SEC’s request the Court lifted the seal on April 17. On April 30, 2014, the Court entered preliminary injunctions extending the asset freeze as to defendants Santiago De La Rosa, of Lynn, Massachusetts, and Randy N. Crosby, of Alpharetta, Georgia. On May 8 and 9, the Court entered preliminary injunctions extending the asset freeze as to all the remaining defendants (Merrill, Wanzeler, TelexFree, Inc., TelexFree, LLC, Joseph H. Craft, of Boonville, Indiana, Steve Labriola, of Northbridge, Massachusetts, Faith R. Sloan, of Chicago, Illinois, and relief defendants (TelexFree Financial, Inc., TelexElectric, LLLP, and Telex Mobile Holdings, Inc.). Read More
Astrologer Stock Broker, Gurudeo Persaud, Barred by SEC
On May 9, 2014, the Securities and Exchange Commission (“Commission”) announced that public administrative proceedings were instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Gurudeo Persaud (“Persaud”).
In connection with the same conduct, last August, Persaud entered into a written agreement to plead guilty to, and has been convicted of and sentenced to three years in prison for one count of mail fraud in the case of United States v. Persaud, Case No. 6:13-cr-25-Orl-36DAB. Read More
SEC Suspends Cannabusiness Group – By: Brenda Hamilton Attorney
On May 7, 2014, the Securities and Exchange Commission (“SEC”) announced the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (“Exchange Act”), of trading of the securities of Cannabusiness Group, Inc. (“CBGI”), of Irvine, California at 9:30 a.m. EDT on May 7, 2014, and terminating at 11:59 p.m. EDT on May 20, 2014. The Commission temporarily suspended trading in the securities of CBGI because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s operations. Read More
Securities Lawyers Gone Wild l Allen Ross Smith Charged
On May 2, 2014, the Securities and Exchange Commission (“SEC”) charged Florida lawyer Allen Ross Smith with fraud in connection with his role in in an advance fee investment scam run by the Switzerland-based Malom Group AG. Read More
OTC Pink Current Q & A l By: Brenda Hamilton Attorney
Securities Lawyer 101 Blog
Companies quoted with the OTC Pink tier are assigned to one of three tiers by the OTCMarkets based upon the amount of disclosure provided to the public. The OTC Pink Current tier is the highest of these tiers, created for companies that voluntarily provide specific disclosures to the OTC Markets. This pink paper addresses the most common questions we receive about the OTC Pink Current tier. Read More
FINRA Members to Investigate FINRA U-4 Applicants
FINRA approved new rules that require member firms to verify the accuracy of information provided by applicants on FINRA U-4 applications. Additionally, FINRA will also review public financial records for all registered representatives who have not been fingerprinted within the prior 5 years. Read More
SEC Charges Barry Bekkedam In Connection with Banyon Fund – By: Brenda Hamilton
The Securities and Exchange Commission (the “SEC”) has filed securities fraud charges against Barry Bekkedam of Hobe Sound, Florida. Bekkedam is the former owner, Chairman, and Chief Executive Officer of Ballamor Capital Management, LLC (“Ballamor”), a formerly SEC-registered investment adviser located in Radnor, Pennsylvania.
The SEC’s complaint, filed in U.S. District Court for the Eastern District of Pennsylvania, alleges that from April through October 2009, Bekkedam fraudulently induced, or assisted in inducing, his advisory clients and others to invest approximately $100 million in a fund that purportedly purchased lawsuit settlements from now-convicted Ponzi-schemer Scott Rothstein. The settlements Rothstein sold were not real and the supposed plaintiffs and defendants did not exist. Rothstein simply used the funds in classic Ponzi scheme fashion to make payments due to other investors and support his lavish lifestyle. Rothstein’s scheme collapsed in October 2009, and he is currently serving 50 years in federal custody. Read More
Securities Lawyers Gone Wild l Three-Time Felon & Lawyer Indicted
On April 6, 2014, Texas attorney Richard Plato was indicted for mail fraud and securities fraud.
Plato is a disbarred attorney who has been convicted in three separate criminal cases, including money laundering and wire fraud in the collapse of a large Florida insurer.
The indictment of Plato by a Texas grand jury is for seven counts of mail fraud and two counts of securities fraud. Read More
Fund Manager Brian Callahan Pleads Guilty In $96 Million Ponzi Scheme
On April 29, 2014, Brian Callahan pleaded guilty to one count of securities fraud and one count of wire fraud for operating a $96 million Ponzi scheme through his various offshore investment funds. Pursuant to his plea agreement with the government, Brian Callahan agreed to the forfeiture of $67.4 million, which includes proceeds from the sale of his former residence in Old Westbury, New York and a beachfront condominium in Westhampton, New York. Read More
New York State Prepares to Regulate Bitcoin By: Brenda Hamilton, Attorney
The New York State Department of Financial Services (NYDFS) has stated that it will consider proposals for a regulated virtual currency exchange to better protect consumers and prevent money-laundering.
Cryptocurrencies like Bitcoin continue to grow in popularity, yet they are not governed by any financial regulator. Read More
SEC Obtains Preliminary Injunction Against John Babikian
On April 20, 2014, the Securities and Exchange Commission (the “SEC”) was granted an injunction imposing an asset freeze against penny stock promoter, John Babikian. Babikian is charged with securities fraud.
The Court stated, “There is a high risk that, unless enjoined, John Babikian may commit the alleged fraudulent acts again, given his control of penny stock websites and his aptitude at using anonymous email accounts, alter-ego front companies, and mass email distribution systems.” The SEC’s original asset freeze against John Babikian was imposed on March 13, 2014. Among the assets subject to the SEC’s freeze are two homes in Los Angeles and a portion of the proceeds from the sale of an airplane. Read More
SEC Issues Stop Order For Comp Service’s Registration Statement
On April 23, 2014, the Securities and Exchange Commission (“SEC”) issued a stop order to prevent a Northern California-based company from issuing stock after including false and misleading information in its amended registration statement for an initial public offering (IPO). The registration statement was opined upon by Greg Jaclin, a securities attorney. According to the SEC’s stop order against Comp Services Inc., its registration statement fails to disclose the identity of the control person and promoter behind the company, and falsely states that Comp Services earned revenue for providing computer services even though the company has never earned any revenue. The registration statement has been amended 10 times, most recently in December 2013. Read More
SEC Charges Chris Choi & Poker Player Danny Kuo
On April 23, 2014, the Securities and Exchange Commission(“SEC”) filed insider trading charges against a former accounting manager at Nvidia Corp. who tipped a friend with confidential company information that set in motion a chain of tipping and illegal trading among a network of hedge fund traders who reaped millions of dollars in illicit gains. Read More
SEC Charges Robert Vitale l Posted by Brenda Hamilton Attorney
On April 23, 2014, the Securities and Exchange Commission (“SEC”) filed fraud charges against a former Florida-based stock promoter currently serving a two-year prison sentence for lying to SEC investigators. The SEC’s complaint filed in U.S. District Court in the Southern District of Florida alleges that Robert Vitale defrauded investors, sold unregistered securities, and acted as an unregistered broker-dealer. Read More
SEC Charges Hedge Fund Manager
On April 4, 2014, the Securities and Exchange Commission filed suit in United States District Court in Dallas, Texas, alleging that, from October 2009 to June 2012, Matthew D. Sample of San Diego, California used his hedge fund to raise almost $1 million from five investors based on representations that he would use their money to trade on the investors’ behalf. Instead, the SEC alleges that he fraudulently diverted approximately one-third of the money for his personal use and to make payments to other investors. Read More
SEC Charges Dr. Loretta Itri with Insider Trading of Genta
Brenda Hamilton, Securities Attorney
On April 21, 2014, the Securities and Exchange Commission (the “SEC”) charged a former biopharmaceutical company executive and two others with insider trading on confidential information about the company’s key developmental drug. The company’s stock price fell sharply when it announced clinical trial results for the drug. Read More
SEC Guidance on Rule 147 Intrastate Offerings & Crowdfunding
On April 10, 2014, the Securities and Exchange Commission (“SEC”) issued a revised compliance and disclosure interpretation (“C&DIs”) and provided two new questions concerning crowdfunding under the JOBS Act and the intrastate exemption provided by Rule 147 under the Securities Act of 1933, as amended (the “Securities Act”). Section 3(a)(11) of the Securities Act provides an exemption from the registration statement requirements for any securities offering that is offered and sold only to persons who reside in a single state, where the issuer of the securities is incorporated in and doing business within, the single state.
Rule 147 under the Securities Act (“Rule 147”) provides a safe harbor for offerings conducted in compliance with the requirements of Section 3(a)(11).
Rule 147 requires that the issuer be a resident of, and do business in, the same state in which all offers and sales of securities are made. Additionally, the securities offering may not be offered or sold to any person who is not a resident of such state.
General Solicitation & Advertising In Rule 147 Intrastate Offerings (Question 141.03)
The SEC stated that Rule 147 does not prohibit an issuer from using general advertising or general solicitation in their securities offering; however, any general solicitation or advertising must consistent with Rule 147’s requirement that offers be made only to persons who reside in the state or territory of where the issuer is domiciled and conducts its business.
Issuer Websites to Offer Securities In Reliance Upon Rule 147 (Question 141.05)
This SEC states that issuers generally communicate through their company websites and social media in a broad and indiscriminate manner to the general public. While the specific facts and circumstances of the particular offering would determine if a communication is an offer of securities, the SEC stated that using an established internet presence to disseminate information about a specific offering would likely involve offers to residents outside the state in which the issuer is domiciled and conducts business.
The Use of Internet Portals In Rule 147 Offerings (Question 141.04)
This SEC states that an issuer claiming an exemption under Rule 147 from the registration statement requirements may use an internet portal to promote its offering to residents of a single state in accordance with a state statute or regulation intended to enable crowdfunding within that state if the portal implements safeguards to ensure that offers of securities are made only to persons residing in the relevant state. These safeguards must include, at a minimum:
● Disclaimers and restrictive legends setting forth that the offering is limited to residents of the relevant state under applicable law; and
● Limiting access to the offering information to persons who confirm they are residents of the relevant state.
For more information on Smaller Reporting Company Requirements in Going Public Transactions please visit our blog at http://www.gopublic101.com/blog.
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 at [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 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.
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
www.SecuritiesLawyer101.com
Contemporaneous Private & Public Offerings l Going Public Lawyers
Issuers often require capital during the going public process for their operations until their registration statement on Form S-1 is declared effective. The SEC’s integration doctrine addresses the circumstances under which an issuer can raise capital privately while a registration statement is pending for a public offering. The integration doctrine under was created to prevent companies from improperly avoiding registration by dividing a single securities offering into multiple offerings to take advantage of Securities Act exemptions that would not be available for the combined offering. Read More
Smaller Reporting Companies In Going Public Transactions
The Securities Act of 1933, as amended (“Securities Act”) and the Securities Exchange Act of 1934, as amended (“Exchange Act”), establish different levels of disclosure and reporting requirements based upon the size of the issuer. Issuers who qualify as a smaller reporting company enjoy numerous benefitsin going public transactions including reduced disclosure and reporting obligations.
By streamlining their disclosures small businesses are able to focus their efforts on capital raising activities.
An issuer with Smaller Reporting Company status during its going public transaction may apply the Smaller Reporting Company disclosure rules to its registration statement on Form S-1. This reduces an issuer’s financial statement obligations to two years instead of the three years required for larger reporting companies.
If a company does not qualify as a Smaller Reporting Company at the time of its initial Form S-1 registration statement, it must provide three years of audited financial statements. Read More
SEC Brings Insider Trading Charges in Connection With Deepwater Horizon Oil Spill
On April 17, 2014, the Securities and Exchange Commission charged a former employee of BP p.l.c. and a senior responder during the 2010 Deepwater Horizon oil spill with insider trading in BP securities based on confidential information about the magnitude of the disaster. The price of BP securities fell significantly after the April 20, 2010 explosion on the Deepwater Horizon rig, and the subsequent oil spill in the Gulf of Mexico, resulted in an extensive clean-up effort.
SEC Charges Telexfree in Pyramid Scheme Immigrants l By Brenda Hamilton Attorney
On April 17, 2014, the Securities and Exchange Commission (the “SEC”) announced it filed charges against the Massachusetts-based operators of a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the U.S. The charges were filed under seal, in connection with the Commission’s request for an immediate asset freeze. Read More
The Use of Testimonials in Social Media by Investment Advisers
Generally, SEC rules prohibit investment advisers from using testimonials in their advertisements. In the past several years, the SEC has encountered a number of questions concerning investment advisers’ use of social media. Social media has facilitated consumers’ ability to research and conduct their own due diligence on current or prospective service providers. The use of social media has increased the demand by consumers for independent, third-party commentary or review of any manner of service providers, including investment advisers. Read More
Forex Scams 101 l Brenda Hamilton, Attorney
The Commodity Futures Trading Commission (CFTC) and the North American Securities Administrators Association (NASAA) warn that off-exchange forex trading is at best extremely risky, and at worst, outright fraud. Forex scams are on the rise and a hot new target for the Justice Department and state regulators. Forex scammers often operate multiple businesses and it is common for these fraudsters to operate other types of scams domestically and internationally including boiler rooms, pay day loan stores, credit repair services and penny stock manipulation schemes.
Section 302 and 906 Certifications l Brenda Hamilton Attorney
Chief Executive Officers (“CEO”) and Chief Financial Officers (“CFO”) of public companies must certify the issuer’s annual report on Form 10-K and quarterly report on Form 10-Q. Each issuer must also have disclosure controls and procedures and internal control over financial reporting.
The issuer’s CEO and CFO are each required to make two certifications in the issuer’s Form 10-Q and 10-K reports. These are the “Section 302” and “Section 906” certification. Read More
The Laws That Apply to Finders l Securities Lawyer 101
Companies seeking capital are frequently approached by finders who offer to locate investors in exchange for a fee. This is particularly true in going public transactions. Most finders are not registered as broker-dealers with the Securities and Exchange Commission (“SEC”).
The possibility of receiving capital even through the efforts of a finder creates a tempting opportunity for issuers who need capital. Read More
U.S. Issues Indictment Against Caribbean Money Laundering Operators
Joshua Vandyk, a U.S. citizen, and Eric St-Cyr and Patrick Poulin, Canadian citizens, were indicted for conspiracy to launder monetary instruments, the Department of Justice and Internal Revenue Service (IRS) announced on March 24, 2014. Read More
