SEC Calls Online Advertisements known as “Ad Packs” an Illegal Ponzi Scheme If you are soliciting investors to purchase online advertisements known as “Ad Packs” the SEC might deem them securities and prosecute you for legal violations. The Securities and Exchange Commission recently warned investors to beware of online “paid-to-click” scams that promise an easy…

As you might have heard, the Republicans have unveiled a plan to dramatically revamp or even repeal the Dodd-Frank Act. The Democrats on the House Financial Services Committee are fighting back by trying to sway public opinion away from repeal or reform. What do you think?  Should Congress repeal Dodd-Frank? You can vote on Twitter…

The Securities Act has the following liability provisions: Section 11(a) imposes liability “in case any part of the registration statement, when such part became effective, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading.” It…

Since its enactment, issuers—from the smallest start-ups to the largest investments and hedge funds—have used Rule 506 under the Securities Act of 1933 in the sale of securities. The Rule, which is the most widely used exemption from the registration requirements of the Act, generally allows issuers to sell an unlimited amount of securities to…

Exception to Code 83 Guidelines to the Non-Transferability Rule The Code 83 regulations contain an important exception to the non-transferability rule that arises mostly with stock option grants, despite the fact that restricted stock grants are the type most often impacted by Code Section 83. The exception to the regulations relates to profits realized under…

As you might know, in August 2011, the SEC create the Office of the Whistleblower which established a Whistleblower program at the Securities & Exchange Commission (“SEC”) that encourages insiders to “blow the whistle” on financial fraud, granting the whistleblowers part of the monies recovered from financial fraud.  Whistleblowers can receive an award equal to…

In this speech made on May 6, SEC Commissioner Kara Stein calls for the creation of a digital disclosure task force. The money quote: “What does a shareholder report look like on a four-inch screen?  Let’s look at what the science has to say about the visual display of information.  Let’s not limit ourselves to…

Depending on who you ask, the U.S. Securities and Exchange Commission is either a trigger-happy agency looking to bring the hammer down on business owners or a toothless entity with little to no enforcement power. Of course, as most corporate securities lawyers will tell you, the truth lies somewhere in the middle. Unfortunately, all too…

Mutual fund investors are like anyone else—they find their time consumed by jobs, family obligations, and the myriad of other priorities we face in today’s world.  They are lucky if they can make it to the gym in their spare time.  So, to expect most investors to closely follow the performance of their fund investments,…

Ponzi Scheme A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk. But in many Ponzi schemes, the fraudsters do not invest the money. Instead, they use it to pay…