Failing to Register as a Broker-Dealer On June 29, 2021, the Securities and Exchange Commission (“SEC”) charged[1] Neovest (“Neovest”) Inc. for failing to register with the SEC as a broker-dealer. While Neovest circumvented the related regulations broker-dealers must conform to, it replicated confidential and sensitive information of its customer to a third party without any…

Didi Inc., a Chinese version of Uber, was listed on NYSE (DIDI) on June 30, the day before the Chinese Communist Party’s Founding Day celebration and four days before the United States’ Independence Day. Didi planned to raise approximately $4.4 to $4.9 billion from its IPO, offering 318,000,000 ADSs[1] priced at $14 per share. The…

On June 15th, 2021, the Securities and Exchange Commission (“SEC”) charged First American Financial Corporation, a real estate financing service company headquartered in California for violating policies regarding procedure control of cybersecurity vulnerability. First American is a publicly traded company registered with the SEC under Section 12 (b) of the Exchange Act, and it agreed…

SEC Enforcement, is the price for SEC violations too high to be worthwhile? The Securities Act of 1933 and the Securities Exchange Act of 1934, with all of their amendments, give the Securities and Exchange Commission an arsenal of remedies, designed to teach violators the lesson that misuse of funds and deceptive accounting practices do…

The advancement of computer software has made data analytics a very powerful enforcement tool for the SEC.  Being able to research and extract details from a massive amount of data, then sorting, comparing, and analyzing it provides the SEC with valuable details that were previously unavailable because of being buried in the masses of irrelevant…

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…

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…

On December 5, 2019, the U. S. House of Representatives passed H. R. 2534, known as the Insider Trading Prohibition Act, with a bipartisan vote of 410 – 13.  It is intended to clarify the prohibitions against insider trading, which have developed from judicial case law, giving an interpretation to SEC Rule 10b-5. Those advocating…

A rescission offer takes place when an issuer offers to repurchase an investor’s securities and refund his purchase price plus interest. Most states provide that an issuer can offer those who invested in transactions that violate securities laws a chance to pre-emptively buy back their securities at the original purchase price plus interest. These offers…

The Securities Act of 1933 was drafted by Commissioner Huston Thompson of the Federal Trade Commission (FTC), this was the first securities bill presented to Congress. It proposed “merit regulation” of the securities being submitted for public purchase. “Merit Regulation” Called to bring in the government to determine the reliability of the securities that were…

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