Compliance Bricks and Mortar – The Shutdown Continues

black bricks

“The definition of insanity is continuing to do the same thing over and over, and then expecting different results.”

The US Congress continues to show it’s inability to operate as it has been unable to pass a bill that will fund the operations of the federal government. A big chunk of Congressmen want overturn the Affordable Care Act. The House of Representatives has passed forty bills that repeal the law. Forty times it has passed in the House and Forty times it has died in the Senate. Now they have tried again and harnessed the repeal of the law to the funding bills. Insanity.

Enough ranting. Here are some the compliance-related stories that recently caught my attention.

If One Bad Actor Spoils The Whole Barrel, What’s An Issuer To Do? by Keith Paul Bishop in California Corporate & Securities Law

The Jackson Five had it wrong. Under the SEC’s recently adopted Rule 506(d), one bad actor can indeed spoil the whole bunch. To some extent issuers can exercise some control over who becomes or remains a covered persons. However, an issuer may not be able to rid itself of all bad actors.

TD Bank To Pay $52.5 Million In Fines To Regulators Over Role In Rothstein Ponzi Scheme by Jordan D. Maglich in Ponzitracker

TD Bank was the primary banking institution used by Rothstein while he sold over $1 billion in purportedly-discounted pre-lawsuit settlements to investors for several years until October 2009. Potential investors were told that the settlements had already been deposited into a separate trust account in their name at TD Bank, and were provided so-called “lock letters” signed by Spinosa indicating that distribution of the funds was restricted only to the investor named in the lock letter. Spinosa also participated in at least one conference call with potential investors in which he supplied scripted answers to a series of Rothstein’s questions. In total, Rothstein raised approximately $1.4 billion from investors.

Crowdfunding v. Rule 506(c) Offerings by Joe Wallin in Startup Law Blog

Rule 506(c) offerings are not crowdfunding offerings under the JOBS Act.  Crowdfunding is embodied in Title III of the JOBS Act. The repeal of the ban on general solicitation in all accredited investor Rule 506 offerings appears in Title II of the JOBS Act.  So, the SEC’s repeal of the ban on general solicitation is not what is referred to as crowdfunding under the JOBS Act.

Toward a New SEC Enforcement Doctrine by Thomas O. Gorman in SEC Actions

New SEC Chair Mary Jo White has launched a new get tough policy. She modified the much discussed and often criticized “neither admit nor deny” settlement policy of the agency. Now she has outlined a new policy centered on a series of basic principles which will govern SEC enforcement. While many of those principles are familiar, the key will be how they implemented to achieve the Commission’s statutory mission and goals.

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