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Tagged Posts: Dodd-Frank’

An Example of How Securities Laws Can Be Broader than Most People Think: SEC Warns Investors of Fantasy Stock Trading Websites (Part 2)

November 21, 2015

In re Sand Hill Exchange.

In re Sand Hill Exchange involved two Silicon Valley entrepreneurs, Gerrit Hall and Elaine Ou, who operated a website called Sand Hill Exchange (“Sand Hill”).[1] The SEC said that the two wanted to create a business that would involve valuing private startup companies, especially companies operating in Silicon Valley, and initially experimented with several business models, including a variation of a “fantasy sports” league, a valuation contest, a valuation game, and so forth.[2] The SEC alleged that, starting around February 2015, Sand Hill started offering its new products that allowed users to fund their Sand Hill accounts with either dollars or bitcoins and then buy and sell contracts that referenced a private company, such as Uber, Pinterest, Snapchat, and Coinbase.… Read the rest

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

November 10, 2015

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 these terms are defined broadly and include any agreement, contract, or transaction whose value is based upon – or “derivative” of – the value or performance of some other financial product, event, or characteristic.… Read the rest

Aiding and Abetting Securities Violations

July 20, 2015

SEC v. Apuzzo

When we think about third party liability in securities violations, we tend to think service providers (e.g., lawyers, accountants, or brokers) that somehow participated in preparation of false or misleading statements in connection with the sale of securities.  While that is certainly true in many cases, it is not always the case.  Here’s a case in point showing how a third-party business partner can be liable.

In SEC v. Apuzzo,[1] United Rentals, Inc. (“URI”) engaged in fraudulent sale-leaseback transactions whereby it sold used equipment to General Electric Credit Corp.… Read the rest

Aiding and Abetting Securities Violations

July 18, 2015

Can I Be Liable for Somebody Else’s Wrongdoing?:  Aiding and Abetting Liability in Securities Law Violations

The Dodd-Frank Amendment

The financial crisis and the ensuing economic downturn of the past few years prompted a series of reforms aimed at improving regulation of the financial industry.  The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, in particular, amended the Securities Exchange Act of 1934 to permit the SEC to bring an action for aiding and abetting a securities law violation. … Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.