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…

Four principal conditions to a private placement memorandum (PPM) “not involving a public offering” of securities under Section 4(a)(2) and Regulation D, Rule 506; namely: Offeree suitability (investors must be accredited or sophisticated);Availability of material information (all material information about the issuer and its business must be made available to investors);Manner of offering (no general…

The (“SEC”) Securities and Exchange Commission awarded a whistleblower $5,000,000 after successful enforcement action was brought against the company using the information provided by the whistleblower. The $5,000,000 sum was calculated as a percentage of the monetary sanctions the SEC collected from the company after the whistleblower voluntarily provided original information, saving the SEC time…

The Securities and Exchange Commission (“SEC”) charged Antonio Bravata, a repeat securities law violator, with securities fraud after learning that Bravata was offering securities of a company he owned and controlled while serving his sentence for another Ponzi scheme.  The SEC was able to put a stop to the securities offering before any money was…

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