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April 2015 Archives

SEC Chair, Mary Jo White, Discusses All-Encompassing Enforcement

This March the Securities Industry and Financial Markets Association's ("SIFMA") Compliance and Legal Society Annual Seminar was held in Phoenix, Arizona. The seminar hosted over 300 industry experts who discussed the latest regulatory and compliance issues. This post will highlight remarks made by Mary Jo White, Chair of the U.S. Securities and Exchange Commission ("SEC"). According to White, the SEC is practicing all-encompassing enforcement of securities laws. White began her comments  by stating  that her "message today is that a robust combination of criminal and regulatory enforcement of the securities laws is not only appropriate, but also critical to deterring securities violators, punishing misconduct, and protecting investors." Investigations by the SEC are conducted independently but in cooperation with law enforcement agencies such as the Federal Bureau of Investigation ("FBI") or Department of Justice ("DOJ"). By working with these law enforcement agencies the SEC is able to add tools such as wiretaps and search warrants to securities fraud investigations. In her speech, White focused on the three areas below to explain how all-encompassing enforcement works in practice: Insider Trading Insider trading is a staple of SEC and criminal prosecutors. These cases generally begin as referrals, containing information that suggests suspicious activity, from the Financial Industry Regulatory Authority ("FINRA") or the Options Regulatory Surveillance Authority ("ORSA"). The SEC also utilizes newer technologies to assist with trade analysis along with civil tools such as the ability to freeze assets to bring about insider trading charges. Microcap Fraud Most microcap fraud cases benefit from extensive cooperation from law enforcement. When patterns of suspicious trading activity are discovered, they lead to further investigation. This information can be the genesis for a criminal investigation utilizing traditional law enforcement methods such as undercover agents. Financial Fraud The SEC's expert accountants work alongside law enforcement to uncover financial reporting fraud. Recently the SEC worked with the Manhattan District Attorney's office to bring a case against a prominent law firm for its accounting misstatements. For more information on this and other related subjects, please contact us at info@jackolg.com or (619) 298-2880.

SEC Approves Final Rules Regarding Regulation A

Cost-of-Regulations-300x205The Securities and Exchange Commission (“SEC”) has approved the final rules to update and expand Regulation A (referred to as Regulation A+). Regulation A, part of Title IV of the Jumpstart our Business Startups (“JOBS”) Act, provides an exemption from registration for smaller issuers of securities. The final rules will provide exemptions for two tiers of offerings that will help smaller companies’ gain access to capital while still providing protections and more investment choices to investors.The update to Regulation A’s current exemption will allow smaller companies to offer and sell securities of up to $50 million within a 12 month period. The offerings which fell under Regulation A will be divided into two tiers, and will be subject to eligibility, disclosures and reporting requirements. According to SEC Chairwoman Mary Joe White “These new rules provide an effective, workable path to raising capital that also provides strong investor protections.” White also went on to state that “It is important for the Commission to continue to look for ways that our rules can facilitate capital-raising by smaller companies.”According to the SEC Press Release the final rules provide for two tiers of offerings and are as follows:
  • Tier 1, which would consist of securities offerings of up to $20 million in a 12-month period, with not more than $6 million in offers by selling security-holders that are affiliates of the issuer.
  • Tier 2, which would consist of securities offerings of up to $50 million in a 12-month period, with not more than $15 million in offers by selling security-holders that are affiliates of the issuer.
Please refer to the Press Release for additional information regarding requirements and eligibility for each tier. The rule amendments will go into effect 60 days after publication in the Federal Register.For more information on this and other related subjects, please contact us at info@jackolg.com or (619) 298-2880.
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