Articles Posted in Securitieslegal

Materiality in 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 the definition…

Capital Formation, Liquidity, and Risk Management The three basic functions of securities markets are: capital formation, liquidity, and risk management. These markets pair the companies that need capital to function, and the investors with capital that are looking for a return on their investments. It also connects investors together, those that are looking to liquify…

On Thursday, December 27, 2018 the Securities and Exchange Commissionbegan operation within its plan during a federal government shutdown. They say they have “staff available to respond to emergency situations involving market integrity and investor protection.” That meansthat out of the 4,426 active staff employees of the SEC, 175 will be retained to protect life…

The JOBS (Jumpstart Our Business Startups) Act of 2012, is an amendment to both the Securities Act and the Exchange Act. Its purpose is to encourage economic growth and the increase in jobs, by relaxing the regulatory encumbrances on business start-ups that trying to raise capital in securities markets. There are three major differences in…

SOn December 21, 2018, the Securities and Exchange Commission (“SEC”)announced settled charges against New York-based investment advisers American Portfolios Advisers Inc. (“APA”) and PPS Advisors Inc. (“PPS”), and PPS’s CEO Lawrence Nicholas Passaretti. The advisers selected mutual fund share classes inconsistent with their client disclosures. As a result, the firms and the CEO will pay…

On November 29, 2018, the Securities and Exchange Commission (“SEC”) charged two celebrities with unlawfully touting initial coin offerings (“ICOs”). This is the first time that the SEC has brought touting violation charges involving ICOs. Professional boxer, Floyd Mayweather Jr. and music producer Khaled Khaled, commonly known as DJ Khaled, each received cease and desistorderswith…

Regulation D’s Rule 504 and Rule 506 grant exemptions from registration if different requirements are met. Rule 504 Rule 504 of Regulation D provides an exemption from registration for a 12-month period on the offer and sale of up to $5,000,000.Rule 504 permits general offerings and solicitations so long as they are restricted to accredited…

The 2017 Tax Cuts and Jobs Act established a section of the tax code that allows taxpayers to utilize a new investment vehicle called Opportunity Funds, in an effort to bring resources to low income communities known as Opportunity Zones. What is an Opportunity Zone? The Internal Revenue Service (“IRS”) describes the Opportunity Zones as…

Part 1: What is an Opportunity Zone? The 2017 Tax Cuts and Jobs Act established a section of the tax code that allows taxpayers to utilize a new investment vehicle called “Opportunity Funds”, in an effort to bring resources to low income communities known as Opportunity Zones. What is an Opportunity Zone? The Internal Revenue…

Preparing a Private Placement Memorandum(PPM) that provides full and fair disclosure of the material aspects of the offering is recommended when offering and selling a Regulation D investment. General solicitation includes websites, blast emails, and social networking media that can be viewed or accessed by the public. Thus, PPMs should not be made available on…