Before investing, knowing the identity and background of the person offering the security can be just as important as knowing the financial statistics of the company. The SEC recently charged a convicted felon with “raising over $30 million from hundreds of investors in a fraudulent initial coin offering (ICO).” The defendant “darkened his hair, grew…
Opportunity zone property After two sets of proposed rules, the Treasury and the IRS have now issued their final Opportunity Zone Tax Regulations, which went into effect on March 13, 2020, for tax years beginning after that date. The Tax Cuts and Jobs Act created special tax benefits for investors. A detailed analysis of each…
A disclosure schedule is very imprtant! In the process of putting together a merger or an acquisition of one company by another, there is a lot of negotiating to go on and a lot of representations made by the seller to impress the buyer. Whether those representations are in writing or speaking, the buyer will…
Beware of Investment Fraud Schemes! The Securities and Exchange Commission has issued an alert to investors about fraudulent schemes being promoted during the COVID-19 pandemic. The SEC can issue trading suspensions and use other enforcement tools, as needed, but that doesn’t always make the investor, who was misled, entirely whole. The best way to avoid…
When violations are discovered by the Securities and Exchange Commission (“SEC” or “Commission”), many investigation subjects (“Subjects”) consider settling with the SEC. This is often the right move, but there are pros and cons to this choice. The SEC’s priority is investor protection. According to the SEC Chairman, “the sooner harmed investors are compensated, the…
An accredited investor – How is the definition being expanded? The proposed rule will amend the definition of an “accredited investor” as follows: With regard to individuals, the proposed rule would add the term “spousal equivalent” to the definition of a spouse, and give accredited investor status to individuals: that have certain professional certifications or…
The Removal of Restrictive Legends from Stock Certificates What is Rule 144? Rule 144 under the Securities Act of 1933 is enforced by the Securities and Exchange Commission (“SEC”).  When a shareholder acquires restricted securities or holds control securities, the shareholder must find an exemption from the SEC’s registration requirements in order to sell the…
Mergers and acquisitions are an integral part of how industries are shaped. They can allow smaller companies to better compete with larger established companies or consolidate market share to increase profits. Being acquired can also offer a smaller business a less costly route to become a public company. The terms, merger and acquisition, are often…
What is Materiality? Materiality is a type of fraud because it uses informational defects to evade a transaction. A fact is material if “there is a substantial likelihood a reasonable investor would consider important” while deciding something concerning securities. (TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438 (1976). The Supreme Courts wanted to make…
We recently posted about the advantages of a Private Placement Memorandum (ppm), and the necessity of complying with all of the requirements to stay within the exemption granted by the Securities and Exchange Commission. This post explores the reasons you need the assistance of a securities attorney in the preparation and execution of your PPM…
