Articles Posted in Corporate Misconduct

Microcap and Penny Stock Market Manipulation and Fraud – Boca Raton, Fort Lauderdale and West Palm Beach, Florida State and Federal Court Litigation Attorney:

SEC Charges Eight for Roles in Widespread Pump-and-Dump Scheme Involving California-Based Microcap Company

The Securities and Exchange Commission recently charged a ring of eight individuals for their roles in an alleged pump-and-dump scheme involving a penny stock company based in California that has repeatedly changed its name and purported line of business over the past several years.

South Florida, including Boca Raton, Delray Beach, Lantana, West Palm Beach and Fort Lauderdale, Florida Accounting Fraud, Misrepresentation and Negligence Litigation Attorney:

California-Based Telecommunications Equipment Firm and Two Former Executives Charged in Revenue Recognition Scheme

The Securities and Exchange Commission recently announced charges against a Newport Beach, Calif.-based telecommunications equipment company and two former executives accused of improperly recognizing as revenue more than a million dollars’ worth of inventory that was shipped to a Florida warehouse but not actually sold.

Securities, Including Stocks and Bonds Custodian Fraud, Mismanagement and Misrepresentation FINRA Arbitration and Litigation Attorney:

Securities and Exchange Commission v. Julian R. Brown and Alliance Investment Management Limited, Civil Action No. 14-CV-6130 (N.D. Ill., filed August 8, 2014)

SEC Charges Bahamas-Based Brokerage Firm and President with Facilitating Fraudulent Scheme by Hedge Fund Manager

SEC Announces Fraud Charges Against Three Former Regions Bank Executives in Accounting Scheme

The Securities and Exchange Commission recently announced fraud charges against three former senior managers of Regions Bank for intentionally misclassifying loans that should have been recorded as impaired for accounting purposes. As a result, the bank’s publicly-traded holding company overstated its income and earnings per share in its financial reporting.

The SEC also entered into a deferred prosecution agreement with Regions Financial Corp., which substantially cooperated with the agency’s investigation and undertook extensive remedial actions. Regions will pay a total of $51 million to resolve parallel actions by the SEC, Federal Reserve Board, and Alabama Department of Banking.

Face Value of Bonds, Notes and Other Types of Securities – South Florida FINRA Arbitration and Litigation Attorney:

When using the term “Face Value” in referring to a security, it means the value as given on the certificate or instrument. For example, corporate bonds are usually issued with $1,000 face values, municipal bonds with $5,000 face values and federal government bonds with $10,000 face values. If these instruments are held to maturity, the investor, absent default, would receive the face value of the instrument. This is not necessarily true if the instrument is sold before maturity as the value of the bonds fluctuate in price from the time that they are issued until redemption. This price fluctuation is based upon a number of factors, including the credit worthiness of the issuer, the interest rate carried by the bond and the length of time until maturity.

Please keep in mind that this information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If you have any questions concerning the contents of this post, you should contact a qualified professional.

Florida Shareholder Notice and Consent Requirements and Dissenters’ Rights – South Florida Corporate Litigation and Arbitration Attorney:

Shareholder notice and consent requirements and dissenters’ rights statutes are intended to insure that directors do not fundamentally change the nature of the shareholders’ investments without the check and balance of informed shareholder approval, and the opportunity for dissenters to withdraw from the corporation. A critical part of Florida’s statutory scheme giving dissenters the right to withdraw from the corporation is section 607.1301(2), which defines the term “fair value” for purposes of the dissenters’ rights statute. ‘Fair value,’ with respect to a dissenter’s shares, means the value of the shares as of the close of business on the day prior to the shareholders’ authorization date, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable.

Please keep in mind that this information is being provided for educational purposes only. It is not designed to be complete in all material respects. Thus, it should not be relied upon as legal or investment advice. If the reader has any questions concerning the contents of this post, you should consult a qualified professional.

Prohibited Activities of Corporate Officers and Directors – Broward and Palm Beach County, Florida Corporate Misconduct Litigation and Arbitration Attorney:

It is a cardinal principle, in Florida, that an officer or director of a corporation will not be permitted to make profit out of his official position and because of their fiduciary character, officers and directors will not be permitted to acquire for their own advantage interests adverse or antagonistic to the corporation. While it is true that corporate officers or directors are not precluded, because of the fiduciary nature of their position, from entering into and engaging in another similar enterprise separate from the corporation, they must refrain from interfering with the business of the corporation and they must act in good faith. 

Examples of such activity include:

South Florida, including Dade, Broward, Palm Beach and Martin County, Securities and Investment Broker/Dealer, Investment Advisor and Private Fraud, Mismanagement and Misrepresentation Arbitration and Litigation Attorney

What Constitutes a Security:

What initially comes to most people’s minds when the word security is mentioned is a stock or bond.  Yet, from a legal standpoint, the word security has a much more expansive meaning. For example, in the State of Florida the word “security” is defined in Florida Statute 517.021(21). The word “security” includes a note, stock, treasury stock, a bond, a debenture, an evidence of indebtedness, a certificate of deposit, a certificate of deposit for a security, a certificate of interest or participation, a whiskey warehouse receipt or other commodity warehouse receipt, a certificate of interest in a profit-sharing agreement or the right to participate therein, a certificate of interest in an oil, gas, petroleum, mineral, or mining title or lease or the right to participate therein, a collateral trust certificate, a reorganization certificate, a preorganization subscription, any transferable share, an investment contract, a beneficial interest in title to property, profits, or earnings, an interest in or under a profit-sharing or participation agreement or scheme, any option contract which entitles the holder to purchase or sell a given amount of the underlying security at a fixed price within a specified period of time, any other instrument commonly known as a security, including an interim or temporary bond, debenture, note, or certificate, and receipt for a security, or for subscription to a security, or any right to subscribe to or purchase any security or a viatical settlement investment. Wow!

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