Category: What is a Security?

Compliance Lessons from Star Wars – Rebels

With the pending release of Episode VIII – The Last Jedi, I’m joining Tom Fox in tying compliance and the Star Wars franchise together in some posts this week. Star Wars is about the rise of the evil galactic empire and the rebels who fight against it. I think some Bitcoin advocates are trying to be the

Is a TIC a security?

TIC refers to Tenancy in Common, not the blood-sucking insect. A TIC is a completely legal way of owning real estate that has been around for hundreds of years. When one of the parties owning real estate dies, that ownership interest passes to that owner’s heirs. The alternative is joint tenancy, in which case when

Can Concert Tickets Be Securities?

WFAN morning show co-host Craig Carton was arrested for scamming investors out of $5.6 million. His ploy was a fraudulent ticket resale business. He promised the ability to deliver face-value tickets to concerts by Katy Perry, Justin Bieber, Metallica and Barbra Streisand. According to the Securities and Exchange Commission, he used the investors’ money to

Initial Coin Offerings and the Securities Laws

Regulators have been trying to figure out what to do with the new currencies coming to the marketplace. Bitcoin was the vanguard, bringing its blockchain technology into the public’s view. The Securities and Exchange Commission has issued a Report of Investigation that provides some insight into when these currencies and their rollouts are going to violate securities

Can a California Note Be A Security?

Debt instruments can be securities. Section 3(a)(10) of the Securities Exchange Act of 1934 explicitly includes “notes” in the definition of a security, but does not include loans. Federal law uses some variation of the factors stated in S.E.C. v. Howey Co., 328 U.S. 293 (1946) n analyzing whether an instrument is an “investment contract”

Is The SEC “Kicking and Mutilating The Corpse”?

I have a written a few stories on the SEC’s case against Louis Schooler and his firm, Western Financial Planning Corp. The Securities and Exchange Commission brought charges against them for a real estate investment scheme. Schooler was selling general partnership interests that owned real estate using what looked like inflated valuations. By default general

Turning a Slimy Internet Scheme Into Securities Fraud

Charles Scoville wants to help you get better traffic to your website. He does it through the slimy method of paying people to click on an ad for your website. But he added in a revenue sharing system. The SEC decided that the slimy method had turned securities fraud. There are many, many, many platforms

Fraud, But Is It Securities Fraud?

Although the Securities and Exchange Commission gets blamed for not bringing enough fraud claims, it’s jurisdiction is limited to securities fraud. When I see a real estate case filed by the SEC I pay attention. The case against Richard W. Davis, Jr. brought the “What is a Security?” questions out. The SEC alleges that Richard

So It’s a Security, But Maybe the Private Placement Was Okay?

The tale of Western Financial Planning Corporation and Louis Schooler first caught my eye because the Securities and Exchange Commission brought charges against a real estate company. I stuck with the story because Western Financial tried really hard to structure the investments to avoid being considered securities. Even thought it tried really hard, a court

Miscounting Residents as Securities Fraud

A recent SEC enforcement action caught my attention because it involved defrauding a landlord and miscounting residents. That left me scratching my head over why the Securities and Exchange Commission was involved with a senior living residence. The SEC Enforcement Division alleges that then-CEO Laurie Bebo and then-CFO John Buono made false disclosures and manipulated