Securities Lawyers Gone Wild l Russell Adler Charged
On March 7, 2014, Russell Adler, a former name partner in Scott Rothstein’s now-defunct law firm was criminally charged for funneling illegal campaign contributions to Senator John McCain and Florida gubernatorial candidate Charlie Crist. Adler was charged with a single count of conspiracy to violate the Federal Election Campaign Act. Read More
What Are the Reporting Obligations After My Form S-1 ls Effective?
Once the SEC staff declares your company’s Securities Act registration statement effective, the company becomes subject to Exchange Act reporting requirements. 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 an ongoing basis.
If your company qualifies as a “smaller reporting company” or an “emerging growth company,” it will be eligible to follow scaled disclosure requirements for these reports.
Once your company begins reporting, it will be required to continue reporting unless it satisfies one of the following “thresholds,” in which case its filing obligations are suspended: Read More
John Babikian & Awesome Penny Stocks Charged in Scalping Scheme
On March 13, 2014, the Securities and Exchange Commission (“SEC”) announced fraud charges and an emergency asset freeze against a promoter behind a platform of affiliated microcap stock promotion websites.
The SEC alleges that John Babikian used AwesomePennyStocks.com and its related site PennyStocksUniverse.com, collectively “Awesome Penny Stocks,” to commit a type of securities fraud known as “scalping.”
What is Form S-1 Summary Information? Securities Attorney 101
Form S-1 is the most commonly used registration statement statement filing with the Securities and Exchange Commission (“SEC”). This blog post addresses the summary information section of Form S-1. The requirements of the section are located in Items 501 and 502 of Regulation S-K. The goal of the summary section of Form S-1 is to highlight selected information that is presented in greater detail elsewhere in the registration statement.
The S-1 summary does not contain all of the information required under the specific headings addressed. As such, the Form S-1 summary section should reference the sections summarized. The section includes summaries of Business, Securities, Risk Factors, Management’s Discussion and Analysis of Financial Condition and Results of Operations, Financial Statements and other material information.
Wwebnet CEO Pleads Guilty of $2 Million Securities Fraud
On March 11 ,2014, the Department of Justice announced that Robert Kelly, the chief executive officer of Wwebnet, Inc. (“Wwebnet”), a software development company, pled guilty today in Manhattan federal court to securities and wire fraud charges. According to the charges, Kelly diverted for his own personal use more than $2 million in investor proceeds that was intended for the development of a software program capable of transmitting music, videos, and movies over the Internet. He used the money to trade options, to pay his personal income taxes, and for other purposes unrelated to software development or other legitimate business expenses. Kelly was originally charged in September 2012, and he pled guilty today before United States District Judge Paul A. Crotty. Read More
Status of JOBS Act Rules & Proposals
The Jumpstart Our Business Startups Act (or JOBS Act) (“JOBS Act”), enacted in 2012, is intended, among other things, to reduce barriers to capital formation, particularly for smaller companies.
Among other things, the JOBS Act requires the SEC to adopt rules amending existing exemptions and creating new exemptions that permit companies to raise capital without filing a registration statement with the SEC. Read More
SEC Announces $7.2 Million for Rule 105 Short Selling Violations
On March 8, 2014, the Securities and Exchange Commission announced the largest-ever monetary sanction for Rule 105 short selling violations as a Long Island-based proprietary trading firm and its owner agreed to pay $7.2 million to settle charges. Read More
The Intrastate Exemption l Section 3(a)(11)
Section 3(a)(11) of the Securities Act is generally known as the “intrastate offering exemption.” The exemption is sometimes used by small issuers in going public transactions prior to filing a registration statement on Form S-1.
The intrastate exemption facilitates the financing of local business operations if certain requirements are met. Read More
SEC Suspends Global Earth Energy l Securities Lawyer 101
On March 4, 2014, the Securities and Exchange Commission (“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 Global Earth Energy, Inc. (“Global Earth”), a Nevada corporation commencing at 9:30 a.m. on March 7, 2014, and terminating at 11:59 p.m. on March 20, 2104.
The SEC issued the trading suspension due to a lack of current and accurate information concerning the securities of Global Earth including questions regarding the accuracy of publicly available information about the company’s operations. The SEC acknowledges the assistance of the Alberta Securities Commission, Quebec Autorité des Marchés Financiers, and the British Columbia Securities Commission in this matter.
The SEC cautions brokers, dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the Exchange Act, at the termination of the trading suspension, no quotation may be entered unless and until they have strictly complied with all of the provisions of the rule. If any broker or dealer has any questions as to whether or not he has complied with the rule, he should not enter any quotation but immediately contact the staff in the Division of Trading and Markets, Office of Interpretation and Guidance, at (202) 551-5777.
If any broker or dealer is uncertain as to what is required by Rule 15c2-11, he should refrain from entering quotations relating to Suburban’s securities until such time as he has familiarized himself with the rule and is certain that all of its provisions have been met. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
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
SEC Suspends Broadcast Live Digital l Securities Lawyer 101
On March 4, 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 in the securities of Broadcast Live Digital Corp (“BFLD”) of Toronto, Ontario commencing at 9:30 a.m. on March 7, 2014, and terminating at 11:59 p.m. on March 20, 2104. The SEC issued the trading suspension due to a lack of current and accurate information concerning the securities of Broadcast Live including questions regarding the accuracy of publicly available information about the company’s operations. Read More
SEC Suspends Suburban Minerals Corp
On March 4, 2014, the Securities and Exchange Commission (“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 Suburban Minerals Corp (“Suburban”), of Henderson, Nevada commencing at 9:30 a.m. on March 7, 2014, and terminating at 11:59 p.m. on March 20, 2104. Read More
SEC Obtains Summary Judgment Against StratoComm Penny Stock Defendants
On February 19, 2014, the United States District Court for the Northern District of New York in Albany, New York granted the Securities and Exchange Commission’s motion for summary judgment on liability against all defendants. Read More
SEC Charges Dewey & LeBoeu Executives with Securities Fraud
On March 6, 2014, the Securities and Exchange Commission (“SEC”) announces charges against five executives at Dewey & LeBoeuf,and finance professionals. They are are accused of facilitating a $150 million fraudulent bond offering by Dewey & LeBoeuf, the international law firm where they worked. The SEC alleges that the five turned to accounting fraud when the firm needed money to weather the economic recession and steep costs from a merger. Read More
SEC Shuts Down Pyramid Scheme Using Phony Companies l Securities Lawyer 101
On March 5, 2014, the Securities and Exchange Commission (“SEC”) announced an emergency enforcement action to stop a fraudulent pyramid scheme by phony companies masquerading as a legitimate international investment firm. The SEC has obtained a federal court order to freeze accounts holding money stolen from U.S. investors by Fleet Mutual Wealth Limited and MWF Financial – collectively known as Mutual Wealth. Read More
What are the OTC Markets Reporting Requirements?
Unlike securities listed on stock exchanges such as NASDAQ or the NYSE, securities may trade through the OTC Markets interdealer quotation system whether they are a Securities and Exchange Commission (“SEC”) reporting issuer or not. There are three reporting standards for companies quoted by OTC Markets which vary depending upon the level of disclosure provided to investors.
OTCMarkets OTCQB & OTCQX Reporting Standard Read More
SEC Announces Trading Suspension of Aventura Equities
On March 5, 2014, the Securities and Exchange Commission (“SEC”) announced the temporary trading suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (“Exchange Act”), of trading in the securities of Aventura Equities, Inc. (“Aventura”) commencing at 9:30 a.m. EST on March 5, 2014, and terminating at 11:59 p.m. EDT on March 18, 2014. The Commission temporarily suspended trading in the securities of Aventura because of questions concerning the adequacy and accuracy of publicly available information about Aventura. Read More
How Can I Remove a DTC Chill Or Global Lock? Securities Lawyer 101
DTC Chills and global locks continue to be a growing problem for small companies. The Depository Trust and Clear Corporation (“DTCC”), through its subsidiaries, provides clearing, settlement and information services for securities. DTCC’s subsidiary, the Depository Trust Company (“DTC”) was created to improve efficiencies and reduce risk in the clearance and settlement of securities transactions. Not all securities are eligible to be settled through DTC. Issuers must satisfy the criteria set by DTCC to be settled through DTC. All companies must satisfy this criteria in order to be DTC eligible, including both Securities and Exchange Commission (“SEC”) reporting and non-reporting issuers. Read More
Jerry Williams AKA Monk Ordered to Pay Over $9,600,000
On February 12, 2014, the Securities and Exchange Commission (“SEC”) announced that a Connecticut federal court entered judgments against a former Connecticut-based stock promoter, Jerry S. Williams, and two companies that he controlled, Monk’s Den, LLC and First In Awareness, LLC. Read More
What Is a Naked Short Sale? Securities Lawyer 101
The Short Seller Scape Goat
In recent years, the activities of short sellers have been the subject of controversy. While short selling is a simple process it is widely misunderstood. While the average investor profits when he invests in a stock whose price goes up, a short seller profits when it invests in a stock whose price goes down. Read More
Investor Relations & General Solicitation After the JOBS Act
Investor relations also known as stock promotion involves the publication of information about a public company to increase its stock price and trading volume. The person who publishes this information is sometimes referred to as a “Stock Promoter”. Read More
The SEC Speaks About the Registration Statement Process
The Securities and Exchange Commission recently announced the issuance of Commissioner Elisse B. Walter’s statement, “The Commission’s Registration Process: How to Better Administer an Ounce of Prevention”. The release is a reminder of the importance of preventive action by the SEC and the securities industry at the registration statement stage to nip securities violations in the bud. This statement addressed the registration statement phase of a going public transaction as well as the registration phase applicable to market participants. Read More
SEC Suspends Trilliant Exploration
On February 28, 2014, the Securities and Exchange Commission (“Commission”) ordered the temporary suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange Act”), of trading in the securities of Trilliant Exploration Corp. (“Trilliant”) of New York, Read More
OTCQX Proposes Amendments to its OTCQX Rules
On February 13, 2014, the OTC Markets proposed amendments to its OTCQX rules. The will impact US and international companies seeking listings on the OTCQX. The OTC Markets OTCQX is the premier market tier of the OTC Markets.
These proposals include changes to the rules governing OTCQX market professionals, initial eligibility standards and issuer requirements. Read More
Richard Altomare Convicted of Securities Fraud
On February 26, 2014, the United States Attorney for the Southern District of Florida, and Federal Bureau of Investigation (FBI), Miami Field Office, announce that a federal jury convicted Richard Altomare, 65, of Palm Beach County, on four counts of an indictment, including one count of mail fraud and three counts of securities fraud. Altomare was the former CEO of Universal Express, Inc.
According to the indictment and evidence presented during the trial, Altomare carried out a scheme to artificially inflate the share price and trading volume of stock for a publicly traded company then known as Sunset Brands, Inc. (SSBN). Altomare agreed to pay a former business associate to purchase shares of SSBN stock to give the investing public the false impression that SSBN’s stock was rising and that there was a public market for SSBN stock. Unbeknownst to Altomare, his former associate was an informant for the FBI. Read More
SEC Charges Clean Energy l Securities Lawyer 101
On February 25, 2014, the Securities and Exchange Commission (the “SEC”) announced SEC charges against an Arizona-based private equity fund manager and his investment advisory firm for orchestrating a scheme to misallocate their expenses to the funds they manage. Read More
George Louis Theodule Sentenced to 150 Months
On February 26, 2014, the United States Attorney for the Southern District of Florida and Federal Bureau of Investigation, announced the unsealing of an indictment charging George Louis Theodule, former resident of Wellington, Florida. Theodule was charged with multiple counts of wire fraud, securities fraud, and money laundering. Theodule was arrested on August 23, 2013, and had his initial appearance before U.S. Magistrate Judge Dave Brannon later that morning. Read More
Anthonie R. Sparrow Sentenced in $16 Million Scheme
On February 25, 2014, the FBI announced that Anthonie R. Sparrow pled guilty for his role in perpetrating a $16 million securities fraud scheme that victimized hundreds of investors around the world. Sparrow was charged in December 2009 and extradited from Spain. Read More
Reverse Mergers l The Game Changers
Shell brokers continue to tout the virtues of reverse merger transactions, despite recent rule changes that eliminate many if not all of the benefits once conferred by them. Seeking to persuade clients to use their services, these promoters often securities lawyers hark back to the glory days of the reverse merger. Read More
FINRA Fines Brown Brothers Harriman $8 Million for Compliance Failures
The Financial Industry Regulatory Authority (FINRA) announced today that it has fined New York-based Brown Brothers Harriman & Co. (Brown Brothers Harriman) $8 million for substantial anti-money laundering compliance failures including, among other related violations, its failure to have an adequate anti-money laundering program in place to monitor and detect suspicious penny stock transactions. Brown Brothers Harriman also failed to sufficiently investigate potentially suspicious penny stock activity brought to the firm’s attention and did not fulfill its Suspicious Activity Report (SAR) filing requirements. Read More
