The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
June 23, 2021
https://www.sec.gov/news/press-release/2021-108
Without admitting or denying the findings in an SEC Order https://www.sec.gov/litigation/admin/2021/33-10950.pdf, Loci Inc. and its Chief Executive Officer John Wise consented to findings that they violated the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act , and the registration provisions of Sections 5(a) and 5(c) of the Securities Act. Loci and Wise agreed to a cease and desist order and to undertakings to destroy their remaining tokens, request the removal of the tokens from trading platforms, publish the SEC's order on Loci's social media channels, and refrain from participating in future digital asset securities offerings. Further, the SEC Order impose a $7.6 million civil penalty on Loci and an officer-and-director Bar on Wise. As alleged in part in the SEC Release:
[L]oci provided an intellectual property search service for inventors and others users through its software platform called InnVenn. The SEC's order finds that from August 2017 through January 2018, Loci and Wise raised $7.6 million from investors by offering and selling digital tokens called "LOCIcoin." As stated in the order, in promoting the ICO, Loci and Wise made numerous materially false statements to investors and potential investors, including false statements concerning the company's revenues, number of employees, and InnVenn's user base. The order finds that Wise misused $38,163 in investor proceeds to pay his personal expenses. The order also finds that although LOCIcoins constituted securities, Loci's offering was not registered with the SEC and no exemption from registration applied.
Can the SEC Make ESG Rules that are Sustainable? (Speech by SEC Commissioner Elad L. Roisman to the National Investor Relations Institute /2021 Virtual Conference)
https://www.sec.gov/news/speech/can-the-sec-make-esg-rules-that-are-sustainable?
SEC Commissioner Roisman is not jumpin' onto the ESG bandwagon, and, frankly, he's still walking around the car and kickin' the tires. As Roisman notes in part in his remarks [Ed: footnotes omitted]:
You no doubt know that the Commission has increased its attention on ESG matters as well, and the Chair has expressed his intent to propose new disclosure requirements relating to climate change and human capital.[1] I recently shared my belief that the Commission will need to find answers to several questions before it is able to promulgate such rules that would stand the test of time and fit into our historic frameworks.[2] While the complete list is longer, there are three questions I will focus on today:
- What precise items of "E," "S," and "G" information are investors not getting that are material to making informed investment decisions?
- If we were able to identify the information investors need, how would the SEC come up with "E" and "S" disclosure requirements-now, and on an ongoing basis? What expertise do we need?
- If the SEC were to incorporate the work of external standard-setters with respect to new ESG disclosure requirements: how would the agency oversee them-in terms of governance, funding, and substantive work product-on an ongoing basis? And what kind of new infrastructure would be required inside the SEC and at the standard-setters themselves?
https://www.finra.org/sites/default/files/fda_documents/2019062974201
%20Robert%20Brandon%20Prettyman%20CRD%205613767%20AWC%20va.pdf
%20Robert%20Brandon%20Prettyman%20CRD%205613767%20AWC%20va.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Robert Brandon Prettyman submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Robert Brandon Prettyman was first registered in in 2009 with Hornor, Townsend & Kent, LLC. In accordance with the terms of the AWC, FINRA found that Prettyman violated FINRA Rule 2010 and imposed upon him a $5,000 fine and one-month suspension from associating with any FINRA member in all capacities. As alleged in part in the FINRA AWC:
From 2014 to 2019, Prettyman reused 12 customer signatures on approximately 25 documents for account openings and transactions, including distribution requests. On ten of the 25 documents, the signature date and/or other information was also altered with ink and correction fluid. Prettyman then submitted the documents to the firm. The underlying transactions were all authorized and none of the customers complained.
https://www.finra.org/sites/default/files/fda_documents/2017055447501
%20Eric%20P.%20Burton%20CRD%203113849%20AWC%20va.pdf
%20Eric%20P.%20Burton%20CRD%203113849%20AWC%20va.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Eric P. Burton submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Eric P. Burton was first registered in in 1998, and from April 2016 to March 2019, he was registered with LPL Financial LLC. In accordance with the terms of the AWC, FINRA found that Burton violated FINRA Rules 4511 and 2010 and imposed upon him a $5,000 fine and three-month suspension from associating with any FINRA member in all capacities. As alleged in part in the FINRA AWC:
Between August 2016 and December 2016, Burton falsified 22 VA replacement disclosure forms, which he submitted to LPL. On each form, Burton stated, falsely, that gaining a stepped-up death benefit was one of the reasons that the VA exchange was suitable for the customer. In fact, as Burton knew, each VA that was to be replaced had a stepped-up death benefit that, unbeknownst to LPL, was removed at Burton's recommendation immediately prior to the time he recommended the VA exchange. Burton recommended to his customers that the death benefits be removed from the existing VAs in order to make his recommended exchanges look to LPL as though they were more advantageous to the customer than they were, even though each of the 22 VA replacement disclosure forms identified other, accurate reasons why each exchange was suitable for the customer.
http://www.brokeandbroker.com/5917/susan-antilla-racism/
The thing about Glenn Capel's story is that it's not all that uncommon. It is part of the fabric of Wall Street. It is something that makes those in power in the biz uncomfortable to talk about, so they either pretend it doesn't exist, or, if you confront them, their eyes glaze over and their lips press tightly together. Some will say that there's been progress. Sure, you can say that. Talk's cheap. But too often the progress is diluted. Compromised. And more often than not, the road on that highway of progress is littered with the wrecks of careers such as Glenn Capel. The thing with victims such as Capel is that they tend to be deemed unfortunate but acceptable collateral damage. He got a few bucks from settlements of his lawsuits. Hey, good for him but let's not get all tied up with the unfortunate stories of the likes of Glenn Capel. It's sad. Too bad. But we've made progress. Let's just move on, okay?Ummm, no, it's not okay. Never was. Still isn't. This isn't a cost-benefits analysis. This is a man's life.
Attorney Convicted of 28 Counts in FusionPharm Fraud Case Loses Federal Appeal (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5907/jean-pierre-10cir-fusionpharm/
After a 12-day jury trial in the United States District Court for the District of Colorado, attorney Guy M. Jean-Pierre, 60, was found guilty on 28 of 29 counts of conspiracy to commit securities fraud, wire fraud and aiding and abetting, mail fraud and aiding and abetting, securities fraud and aiding and abetting, money laundering and aiding and abetting. Jean-Pierre, was sentenced to 84 months in prison plus three years of supervised release. He appealed. He lost.