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Avoiding Investment Scams

An Example of How Securities Laws Can Be Broader than Most People Think: SEC Warns Investors of Fantasy Stock Trading Websites (Part 1)

On June 17, 2015, the Securities and Exchange Commission (“SEC”) issued an investor alert to warn investors about fantasy stock trading and other similar websites. For a full text of the alert, click here. Although most people think that terms like “swap,” “security-based swap,” and “derivative” include only complicated financial instruments used by sophisticated financial institutions, the SEC explains that…

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Real Estate Securities Fraud Targeting Immigrant Investors (Part 2)

SEC v. Path America, LLC. In SEC v. Path America, LLC, the SEC alleged that Dargey, the individual defendant, set up a series of entities in Everett, Washington, purportedly to offer limited partnership interests priced at $500,000 each, plus an administrative fee of $45,000 per investor.[1] The SEC says that the private placement memoranda (“PPMs”) for the offerings contained statements…

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Real Estate Securities Fraud Targeting Immigrant Investors (Part 1)

If you read our previous blog series on exempt offerings (available here) or attended one of our presentations on raising capital through exempt offerings, you know that the definition of “security” under federal law is extremely broad and includes, among other things, “any note, stock, . . . , certificate of interest or participation in any profit-sharing agreement . .…

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Sethi Petroleum, LLC and Tips for Avoiding Investment Scams

The Court Grants Relief Requested by the SEC In SEC v. Sethi Petroleum, LLC, the court granted the relief requested by the agency, including preliminarily injunction, asset freeze, and appointment of a receiver, among other things, pending final judgement.[1]  The court said that the SEC has made a proper prima facie showing that: (i) the defendants directly or indirectly engaged…

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Sethi Petroleum, LLC and Tips for Avoiding Investment Scams

Sethi’s Alleged Securities Law Violations The specific false and misleading statements, omissions, and acts that the SEC alleges to form the basis of the enforcement action against Sethi and his company are numerous.  For example: The offering documents represented that 70% of the investment funds would be used to acquire, drill, and complete 20 oil and gas wells, when in…

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