Legal
Penny Stock Attorney Eade Banned by the SEC
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A California attorney with a history of working with emerging growth companies has been banned by the Securities and Exchange Commission.
Legal
Former PIPE Fund Managers Reckles and Mannion Fined, Barred by SEC for Fraud
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The Securities and Exchange Commission has fined and barred two PIPE fund managers from the advisory industry for a minimum of two years for misappropriating fund assets for personal use.
Legal
Short Selling and Shareholder Reporting Sanctions Hit EGC Investors
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Two recent enforcement actions by the Securities and Exchange Commission impacted investors in emerging growth companies (EGCs), and should serve notice on other EGC investors that the commission’s enforcement division is watching investor behavior around equity private placements and follow-on offerings closely in the micro- and small-cap markets.
Markets
Section 3(a)(10) Deals Spark Suits, SEC Inquiries
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In the shadow of the Great Recession, Ironridge Global Partners pioneered a micro-cap financing mechanism in which investors buy an issuer’s delinquent or current liabilities, sue the company, and then retire the payables in return for stock. The strategy, which is effected under acourt approved, pre-arranged settlement pursuant to Section 3(a)(10) of the Securities Act, has begun to gain traction in the market among more investors such as IBC Funds and Southridge affiliate ASC Recap. The regulation allows companies to issue unregistered but free trading shares for “bona fide outstanding claims,” among other events. Issuers are often willing participants in the arrangements. That differs significantly from conventional private placements involving unregistered securities, in which investors typically must wait for the filing of an effective registration statement or six months before they can begin trading the shares.
