Category: SEC Violations

Investors be on the alert. Blue skies is really blue skies. The term blue skies came from commissioner Dolley in 1911 of Kansas stating “speculative schemes which have no more basis than so many feet of ‘blue sky‘ ” referencing the amount of company stock issued to the amount of blue sky above you. We are currently seeing the risks, schemes, and exploits with initial coin offerings (ICO) violating various securities laws.

The hype continues daily of the newest companies on Ethereum using smart contracts to issue an ICO on the “blockchain” for their business model.  This is very similar to the Dot-Com Boom of the late nineties.  Blockchain gets internet nerds all warm and fuzzy.

Any business with a dot com at the end of its company name that went public in the late nineties  rocketed in price.  The same holds true today but instead of filing correctly, the startup company skips the  necessary procedures needed to lawfully sell stock to the public.  Instead, they issue an ICO for equity without any proper regulatory filings. Who needs a broker dealer right? Licensed brokers? Nah, waste of time when everyone is thirsty. Just pretend, right?

These companies that raise capital as an ICO usually claim they are incorporated in another country or have some other fake exemption like cash balance receivables as equity or whatever they want to make themselves believe.  What ever the company does, if they solicit US investors it has be filed properly. If it looks like a security, smells like a security, then it is a security. ICO’s  are not exempt from these regulations in the US no matter how they want to slice it up as equity.  Those are some of the basic questions the regulators will ask these ICO’S.

Some of the typical security violation are the 1933 Act, 1934 Act, Reg ATS, or Blue Sky’s laws.  Here’s a typical ICO violation and the full PDF details.

Keep in mind, not all ICO’s are scams. But a good warning, if it seems too good to be true then you may want to question it. Do we all hear pump and dump or ponzi schemes?  FINRA Blockchain Report gives some good insight.  As the old saying goes, “Caveat Emptor” or “Buyer Beware”.

Information contained herein is for informational purposes only and should not be construed as an offer, solicitation, or recommendation to buy or sell securities, or personalized investment, tax or legal advice. The information has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice. TreveriCapital LLC is a California registered investment advisor.

Martin Shkreli Retrophin Ponzi Price Gouging TreveriCapital Security Fraud

Wannabe pharmaceutical hedge fund manager Martin Shkreli gets charged with several violations from the SEC.  Martin gets charged with violations of the 1933, 1934, 1940, and Exchange Act.  Hedge fund manager made several mistakes and tried to hide them.

Some of the violations include:

  • Misappropriation of moneys for food, clothing, medical, office rent, and cash
  • Misleading investors about the size and performance of the fund
  • Falsifying bank and brokerage account assets
  • Lying to an executing broker about his ability to settle a sizable short position
  • Misappropriating $900K for short sale settlement
  • Fraudulently issued stock from Retrophin (RTRX) to pay disgruntled investors and non-disclosure

Read more about bad trades gone semi ponzi here.

Disclaimer: Information contained herein is for informational purposes only and should not be construed as an offer, solicitation, or recommendation to buy or sell securities, or personalized investment, tax or legal advice. The information has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice. TreveriCapital LLC is a California registered investment advisor.

metropolis towers dtla eb-5 los angeles trevericapital SEC lawyer charges

Planned Metropolis Towers DTLA

EB-5 is quite popular here in the Los Angeles area.  Most of the construction downtown Los Angeles is from Chinese EB-5 money.  It definitely attracts multiple participants because of the money involved.  Although there is big money to be made in EB-5, it is highly regulated and difficult to successfully do.

EB-5 is a way for an immigrant (popular with wealthy Chinese) to get a greencard by bringing in money and following strict guidelines. If all guidelines are met, they get a greencard in a few years. This is where it gets tricky.  The general EB-5 guidelines are they need to bring $500K-$1M into the US and generate a minimum of 10 new jobs for 2 years for a new commercial enterprise. What does this mean?   Multiple professionals are needed to align these moons.

To do these deals, a lawyer is needed and somebody with good deal flow.  Why is the deal flow so important?  It’s important because of sustaining 10 jobs for 2 years. That means the project being done as a deal must not fail or eliminate jobs.  If the project fails, then no greencard.  Also, if done incorrectly, you can be in violation of securities laws.

Recently, the SEC charged EB-5 lawyers for being unlicensed securities brokers and in violation of the 1933, 1934, and Exchange Act. Not only did the lawyers charge their normal fees to the client, but they got commissions for the deals without disclosing this to their client.

These EB-5 lawyers that violated the securities laws are another example of why it’s so important to have transparency, full disclosure, and regulators watching after the general public.

 

Disclaimer: Information contained herein is for informational purposes only and should not be construed as an offer, solicitation, or recommendation to buy or sell securities, or personalized investment, tax or legal advice. The information has been obtained from sources believed to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice. TreveriCapital LLC is a California registered investment advisor.

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