SEC Charges Securities Lawyer with Churning Bogus Legal Opinions
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On March 8, 2013, the Securities and Exchange Commission (the “SEC”) charged Brian Reiss, a California securities lawyer, with churning out baseless legal opinions for penny stocks traded on the OTC Markets platform.
Transfer agents require legal opinions from securities lawyers in order to remove restrictive legends from stock issued in reliance upon an SEC exemption from registration.
The SEC alleges that Reiss created a business and accompanying website to promote his opinion writing services. He proudly advertised “volume discounts” and assured potential clients that “penny stocks [are] not a problem.” He sought to attract customers by bidding on search terms through Google’s AdWords, and even relied on a computer-generated template to draft his opinion letters within minutes, absent any true analysis of the facts behind each stock offering.
The SEC alleges that the letters from Reiss contained false and misleading statements and facilitated the sale of securities in violation of the registration provisions of the federal securities laws.
Reiss was banned from writing opinion letters by Pink Sheets (now OTCMarkets) in 2006, but that action did not deter him from pursuing his chosen livelihood. Between January 2008 and December 2010 he penned more than 1,600 legal opinions.
Andrew M. Calamari, Director of the SEC’s New York Regional Office stated, “Reiss flouted his responsibilities as a gatekeeper in the issuance of stock, and churned out opinion letters to make a quick buck…Attorneys who act as gatekeepers in our markets have a solemn responsibility to ensure that they provide accurate information to the marketplace.”
According to the SEC’s complaint, Reiss wrote fraudulent legal opinions letters for $285 and offered a “volume discount” of $195 each for transactions involving two or more certificates of the same company, owned by the same shareholder. He routinely made inaccurate and sometimes contradictory statements about whether shares should be issued as unrestricted, without bothering to conduct an inquiry into relevant underlying facts.
According to the SEC’s complaint,
AUTHOR: Brenda Hamilton
Copyright Hamilton & Associates, P.A.
More information about Hamilton & Associates, P.A.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
The SEC alleges that Reiss created a business and accompanying website to promote his opinion writing services. He proudly advertised “volume discounts” and assured potential clients that “penny stocks [are] not a problem.” He sought to attract customers by bidding on search terms through Google’s AdWords, and even relied on a computer-generated template to draft his opinion letters within minutes, absent any true analysis of the facts behind each stock offering.
The SEC alleges that the letters from Reiss contained false and misleading statements and facilitated the sale of securities in violation of the registration provisions of the federal securities laws.
Reiss was banned from writing opinion letters by Pink Sheets (now OTCMarkets) in 2006, but that action did not deter him from pursuing his chosen livelihood. Between January 2008 and December 2010 he penned more than 1,600 legal opinions.
Andrew M. Calamari, Director of the SEC’s New York Regional Office stated, “Reiss flouted his responsibilities as a gatekeeper in the issuance of stock, and churned out opinion letters to make a quick buck…Attorneys who act as gatekeepers in our markets have a solemn responsibility to ensure that they provide accurate information to the marketplace.”
According to the SEC’s complaint, Reiss wrote fraudulent legal opinions letters for $285 and offered a “volume discount” of $195 each for transactions involving two or more certificates of the same company, owned by the same shareholder. He routinely made inaccurate and sometimes contradictory statements about whether shares should be issued as unrestricted, without bothering to conduct an inquiry into relevant underlying facts.
According to the SEC’s complaint,
AUTHOR: Brenda Hamilton
Copyright Hamilton & Associates, P.A.
More information about Hamilton & Associates, P.A.
View all articles published by Hamilton & Associates, P.A.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
