Banking and Finance Law Articles

It may have been a decade ago, but the fallout of the accounting scandals of the late 1990's and early 2000's continue to resonate through both of the accounting and legal professions. The largely self-regulated accounting profession has enacted numerous changes that continue to evolve in response to the scandals and pressure from government agencies and the public.

Windreich GmbH is said to be bankrupt. An application for self-administered insolvency has been filed at the Municipal Court of Esslingen. The bond subscribers were informed in a letter.

Banks and banking transactions take an important place in finance. With regard to provide the protection of confidence and credibility, the protection of bank customer secrets has become very important. Obligation of secrecy is based on the principal of protection of individuals private life by Article 20 of Turkish Constitution.

As of today, September 23, Securities and Exchange Commission (“SEC”) rules implementing some provisions of the JOBS Act have become effective. Among them is the new Regulation D Rule 506(c).

Since the JOBS Act became law, numerous crowdfunding websites have popped up on the Internet. This month, the first enforcement action was brought against a crowdfunding website.

Private placement offerings under Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”) are a cost effective and relatively quick way for private companies to raise capital before, during and after a going public transaction.

If you have ever complained about your legal fees, or been reluctant to hire an attorney because you did not think you could afford it, just be glad you are not one of the six largest US Banks recovering from the collapse of the housing market and resulting financial crisis. Bloomberg reports that together, they have amassed a whopping $103 billion in legal costs since the beginning of the Great Recession.

The Securities Act in Mauritius has created a real kickoff in the investment environment.

In 2012, the US federal government passed a bill called the JOBS act. Among its provisions was one allowing for small investments in exchange for equity in that company or project without having to go through the SEC or qualify as an investor. What is the difference between crowdinvesting and crowdfunding, what is Kickstarter, and how does it all work from a legal standpoint?

Turkey proved its aspiration with the liberalization of electricity market for being an energy hub in the heart of Europe and Middle East territory. According to Türk Eletrik İletim Anonim Şirketi (TEİAŞ) 2012 report, the electricity demand in Turkey will arise within the range of 398-434 billion kWh in the light of historical perspective in 2023.

The Arabic term for Islamic securities Sukuk , commonly refers to the Islamic equivalence of bonds. The Islamic ban on interest payments is the root cause of the Islamic financial instruments such as Sukuk that provides the investor a share of an asset and its cash flows and involved risks.

It is a horrifying situation. You buy a car, motorcycle, or RV by financing it at the dealership. You sign the paperwork and drive it home with the dealer's blessings only to discover a few days later that the financing has suddenly and unexpectedly been denied. Now the dealer wants its vehicle back and you are left holding the bag, maybe even out a down payment or other fees as well as the cost of any aftermarket additions to your vehicle. What do you do?

The JOBS Act’s new rules permitting general solicitation and advertising in Rule 506 private placements will become effective on September 23, and there is still some confusion about the difference between crowdfunding and general solicitation and advertising in Rule 506(c) offerings.

A common topic on spy shows and mobster movies, money laundering may be an unclear concept for many. What is it? Is it illegal? If so, why? What are the elements of this crime?

When Turkey first acquainted with franchising system, it was 1991. From that day to this, Turkey's economic perspective was entirely amended and currently ranked as the world's 17thlargest economy regarding GDP all over the world and converted into an integrated emerging market with a growing financial system.

Rule 506(c) will become effective in less than a month, on September 23, 2013. The rule fundamentally changes how private placements will be conducted, by allowing issuers to engage in general solicitation and advertising if specific requirements are met. The SEC has confirmed that the Rule 506(c) exemption will not be forgiving for issuers who engage in general solicitation but fail to comply with its requirements.

Companies seeking to raise capital through the sale of securities must either register the securities offering with the SEC or rely on an exemption from registration. Rule 506 of Regulation D is the most widely-used exemption from registration.

Rule 506(c) fundamentally changes how private placements will be conducted, by allowing issuers to engage in general solicitation and advertising if they comply with the Rule’s specific requirements.

Unlike securities listed on stock exchanges such as NASDAQ or the NYSE, securities may trade through the OTCMarkets interdealer quotation system whether they are Securities and Exchange Commission (“SEC”) reporting issuer or not.

Yesterday, FINRA sent a clear message to investors, “medical marijuana legal in almost 20 states, and recreational use of the drug recently legalized in two states, the cannabis business has been getting a lot of attention—including the attention of scammers”.

On June 24, 2013, the Securities and Exchange Commission (“SEC”) instituted administrative proceedings to revoke the registration of Green Solutions China, Inc., Yarraman Winery, Inc. (n/k/a Global Beverages, Inc.; (GBVI), and Yinlips Technology, Inc. pursuant to the Securities Exchange Act of 1934.

The going public process involves a number of steps that vary depending on the characteristics of the private company wishing to go public, and whether it will become a Securities and Exchange Commission (“SEC”) reporting issuer.

ESMA - the European Securities and Markets Authority - published its opinion on arrangements for the late transposition of the AIFMD on 1st August 2013.

In order to adapt the EU payments market to the opportunities of the single market and to support the growth of the EU economy, the European Commission adopted a package on 24th July 2013.

Asset Protection as a concept is fairly simple; you’ve worked hard and earned what you have, and you want to do everything that the law allows to keep as much of it as possible. However, asset protection as an executable legal strategy can be much more complex. Depending on your situation, estate planning, bankruptcy laws, real estate and business law can all come into play.

Going Public Options for Foreign Companies

Smooth Sailing for Companies Avoiding Reverse Mergers in their Going Public Transactions.

Under the Securities Act of 1933 as amended (the “Securites Act”), a Company that conducts an initial public offering (“IPO”) including in a going public transaction must adequately disclose material information to investors.

The offer and sale of securities is regulated by the Securities Act of 1933, as amended (“1933 Act”). Section 5 of the 1933 Act requires any offering to be registered with the SEC or exempt from registration.

Issuers seeking to raise capital often attempt to go public using a reverse merger with a public shell. Blank check companies that file Form 10 Registration Statements (“Form 10 Shells”) are marketed as handy vehicles private companies can use to go public easily.

Form 10 is a Registration Statement used to register a class of securities pursuant to Section 12(g) of the Securities Exchange Act of 1934 (“Exchange Act”). This article addresses common questions we receive from clients about Form 10 registration statements.

The Depository Trust Company (DTC) is the only stock depository in the United States. When DTC provides services as the depository for an issuer’s securities, its securities can trade electronically.

Securities offerings are regulated by the Securities Act of 1933, as amended, (the “Securities Act”). Section 5 of the Securities Act requires that securities offerings be registered with the Securities and Exchange Commission (the “SEC”) or be exempt from the SEC’s registration requirements.

Many private companies seeking to go public are opting to list on the OTCMarkets OTCQB. The OTCMarkets Group operates an electronic inter-dealer quotation system called OTC Link.

This article addresses the most common questions we receive about going public using Form S-1 and the SEC registration statement process.

Securities offerings are regulated by the Securities Act of 1933, as amended, (the “Securities Act”). Section 5 of the Securities Act requires that securities offerings be registered with the Securities and Exchange Commission (the “SEC”) or be exempt from the SEC’s registration requirements.

Private companies going public often file a registration statement with the Securities and exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended (the “Securities Act”), as part of their going public transaction.

Many private companies file a registration statement filing with the SEC in connection with their going public transaction. The most commonly used registration statement form is Form S-1.

The Cayman Islands exempted company is the corporate vehicle of choice among international investment fund managers and investors. The popularity of the exempted company is principally as a result of the Cayman Islands being rightly recognized as a stable jurisdiction for structuring international investments owing to the following features.

On the 15th July 2013, the Malta Financial Services Authority (MFSA) issued a Notice for the purpose of formally notifying all Financial Services License Holders of the recent publication of the Malta Financial Intelligence Analysis Unit (FIAU) Annual Report for 2012, issued in terms of Article 42(1) of the Prevention of Money Laundering Act (Chapter 373, Laws of Malta).

Traditionally, private companies become publicly traded by registering an offering under the Securities Act of 1933, as amended. Another established method for private companies to obtain public company status is through a Reverse Merger (“Reverse Merger”) with a public shell company.

OTCMarkets Group operates the world’s largest electronic inter-dealer quotation system for broker-dealers to trade unlisted securities. The OTCMarkets Group categorizes issuers into three tiers to fit the wide spectrum of OTC issuers.

Companies who go public can list on national securities exchanges such as NASDAQ, the American Stock Exchange or the New York Stock Exchange. The securities of companies who go public can also be quoted by The OTCMarkets Group, Inc. (“OTCMarkets”).

An Initial Public Offering (“IPO”) is often used by a private issuer seeking to go public as part of its going public transaction. An IPO involves registration with the SEC of an offering of securities by a private issuer.

Many private companies are unable to locate an underwriter prior to going public. A direct public offering (“Direct Public Offering”) provides a viable solution to this dilemma.

On the 28th June 2013, the Malta Financial Services Authority (MFSA) issued a Circular to the Financial Services Industry on the proposal by the European Commission for the implementation of a new investment fund framework designed for investors desirous of effecting long-term investments into corporate entities and projects.

On the 17th July 2013, the Malta Financial Services Authority (MFSA) issued a Circular to the financial services industry confirming its position in respect of investment services provided in relative to binary options. The Circular follows clarification by the European Commission of the relevant issues in terms of the Markets in Financial Instruments Directive, 2004/39/EC, (MiFID) and expressly confirms that binary options do fall within scope of the said MiFID Directive.

We are a custodian bank based outside the EU currently considering establishing a presence in Malta with a view towards servicing Malta-licensed alternative investment funds. When should we expect Malta-based funds to be required to engage the services of a Malta-based depositary in conformity with the new AIFMD requirements? Are there any exceptions that apply, permitting other non-Maltese depositaries to service Malta-licensed funds?

As 22 July 2013 looms ever closer, as part of our continuing legal update series on this topic, this Guidance Note seeks to consider the impact of the Alternative Investment Fund Managers Directive (the “Directive”) for non-EU Managers who manage Cayman Islands domiciled funds.

On July 10, 2013, the Securities and Exchange Commission (“SEC”) adopted a new rule to implement a JOBS Act requirement to lift the ban on general solicitation or general advertising for certain private securities offerings. The SEC also adopted rules that disqualify felons and other bad actors from participating in certain securities offerings as required by the Dodd-Frank Act.

The European Central Bank ("ECB") and the Economic and Monetary Affairs Committee ("ECON") have issued opinions following the adoption by the European Commission, on 5th February 2013, of a Proposal for a Fourth Anti-Money Laundering Directive and a Proposal for a Regulation on Information Accompanying Transfers of Funds, to reinforce the EU's existing rules on anti-money laundering and fund transfers.

A spin-off (“Spin-off”) involves a transaction in which a parent company (“Parent”) distributes shares of its subsidiary (“Subsidiary”) to the Parent’s shareholders so that the Subsidiary becomes a separate, independent company.

Registration of securities on Form S-8 (“Form S-8”) is a short-form registration statement under the Securities Act of 1933, as amended (the “Securities Act”).

The Securities Act of 1933, as amended (the “Securities Act”) requires the sale of a security to be registered under the Securities Act, unless the security or transaction qualifies for an exemption from registration.

On June 26, 2013, the Securities and Exchange Commission (“SEC”) suspended trading in the stock of Norstra Energy, Inc. (NORX).

To offer and sell securities in the United States, an issuer must comply with the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), or must offer and sell the securities pursuant to an exemption from the registration statement requirements.

With approximately a month to go from the transposition deadline, Malta has announced that it is first member state to have fully transposed the Alternative Investment Fund Management Directive (“AIFMD / Directive”).

Many companies file a registration statement filing with the SEC in connection with their going public transaction. The most commonly used registration statement form is Form S-1.

Public companies with a class of securities registered under Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are subject to the periodic and current reporting requirements of Section 13 or 15(d) of the Securities Exchange Act.

On June 26, 2013, the Securities and Exchange Commission (“SEC”) filed an enforcement action charging Imaging3, Inc. (IMGGQ), and Dean Janes, its CEO, with securities fraud, accusing Janes of misleading shareholders about actions taken by the Food and Drug Administration (“FDA”) in connection with the company’s product.

Shell brokers continue to tout the virtues of reverse merger transactions, despite recent rule changes that eliminate many if not all of the benefits once conferred by them.

On the 18th June 2013, the Malta Financial Services Authority (MFSA) issued a Note for Consultation on the proposed implementation of the Alternative Investment Fund Managers Directive (‘AIFMD’).

The Jumpstart Our Business Startups Act (the “JOBS Act”) allows an “emerging growth company” to submit a draft of its registration statement and exhibits to the Securities and Exchange Commission (the “SEC”) on a confidential basis.

The JOBS Act includes provisions to allow intermediaries known as “Crowdfunding Portals” to assist companies with raising capital using the internet. Crowdfunding Portals will serve as attractive capital raising centers for private companies seeking to go public in need of seed capital.

The Jumpstart Our Business Startups (“JOBS”) Act was signed into law by President Obama on April 5, 2012. The JOBS Act requires the Securities and Exchange Commission (the “SEC”) to issue final regulations regarding the portions of the JOBS Act relating to crowdfunding within 270 days of the law’s enactment on December 31, 2012.

The OTC Bulletin Board (“OTCBB”) is an electronic quotation system that provides real-time quotes, last-sale prices, and volume information for some over-the-counter securities not listed on a national securities exchange such as NASDAQ.

The last step in going public transactions is for the soon-to-be-public company to obtain a stock trading or ticker symbol. In order to obtain a ticker symbol, the company seeking to go public’s stock must first be listed on a national securities exchange or qualify for quotation on the OTCMarkets’ Pink Sheets, OTCQB, or OTCQX markets.

The Jumpstart Our Business Startups (“JOBS”) Act was signed into law by President Obama on April 5, 2012. The JOBS Act requires the Securities and Exchange Commission (the “SEC”) to issue final regulations regarding the portions of the JOBS Act relating to crowdfunding within 270 days of the law’s enactment on December 31, 2012. As of May 5, 2012, the SEC still has not issued the required JOBS Act’s final regulations concerning crowdfunding.

Rule 144(c) of the Securities Act of 1933, as amended (the “Securities Act”) requires that stockholders of public companies relying upon Rule 144 satisfy its adequate current public information requirement. The requirements depend upon whether the issuer is a reporting or non-reporting company.

Many private companies that go public are opting for the listing on the OTCMarket’s Pink Sheets due to the increased costs and more stringent regulations associated with Securities and Exchange Commission (“SEC”) reporting.

The OTCMarkets Group operates an electronic inter-dealer quotation system called OTC Link that broker-dealers use to trade securities not listed on a national securities-related exchange. OTCMarkets rank issuers in tiers; each issuer’s rank depends upon the amount of disclosure provided. Issuers using SEC Rule 15c2-11 qualify for the “OTC Pink Current Information” tier.

Going public is a big step for any company. The process of “going public” is complex and at times precarious. While going public offers many benefits it also comes with risks and quantities of regulations with which issuers must become familiar.

The OTCMarkets describes its OTCQX marketplace as the premier tier of the U.S. Over-the-Counter (OTC) markets, providing investors with an objective measure to ide3ntify exceptional OTC-traded companies.

Why Both Private and Public Companies Need a Securities Attorney

Broker-dealers are subject to regulation by the SEC, FINRA, Self Regulatory Organizations (“SROs”) such as stock exchanges, and the states in which they do business.

Bogus State Court Actions Used in $28 million fraud Lead to Indictments

State Blue Sky laws play a significant role in the enforcement of the securities laws. Each State has its own securities laws and regulations.

The Securities and Exchange Commission recently approved the Financial Industry Regulatory Authority (“FINRA”) proposals to amend Rule 5123 governing FINRA members who participate in private offerings of securities (“Rule 5123″).

On February 27, 2013, in the case of Gabelli v. Securities and Exchange Commission, the U.S. Supreme Court unanimously concluded that the statute of limitations for SEC enforcement actions seeking civil penalties expires 5 years after the time when the alleged fraud takes place, not when it is discovered.

Recent actions by the Securities and Exchange Commission (the “SEC”) and the media have alerted the public to fraud involving reverse mergers and Chinese issuers.

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.

The Securities Act of 1933 (the “Securities Act”) provides for a private offering or private placement exemption from federal securities registration which is increasingly being used by both public companies and private companies seeking to go public to raise capital during market downturns and in times of market uncertainty.

On March 7, 2013, the Financial Industry Regulatory Authority (“FINRA”) barred Jeffrey Rubin of Lighthouse Point, Florida, from the securities industry.

Familiar to everyone in connection with real property, squatting consists of occupying an abandoned or empty property that the squatter does not have lawful permission to use.

The Investment Services Act (CHAP. 370 of the laws of Malta) currently defines collective investment schemes as arrangements which, inter alia, “operate according to the principle of risk spreading”. By virtue of this definition, the requirement of risk spreading has been imposed on all licensed collective investment schemes alike and this irrespective of the type of collective investment scheme licence.

It has become routine for public companies and private companies seeking to go public to place restrictive legends (“Restrictive Legends” on the certificates representing their Restricted Securities not covered by a registration statement under the Securities Act of 1933, as amended (the “Securities Act”).

A Wells Notice is sent to subjects of a Securities and Exchange Commission (“SEC”) investigation when Enforcement staff has substantially completed its investigation and intends to recommend that an enforcement be pursued.

The author answers the most frequently asked questions on OTC Pink Current Disclosures.

The author answers the most common questions on Form S-8.

Short selling can be a legitimate trading strategy. It is often endorsed for its beneficial effects on the securities markets, which include increasing liquidity. It is also criticized. Short sellers profit by identifying companies that are weak or overvalued, and companies whose shares have been manipulated to rise to artificially high share prices.

SEC Charges Laidlaw and Its CEO for Securities Violations

Recent SEC amendments to FINRA Rule 6440, grant authority for FINRA to initiate trading and quotation halts in OTC equity securities when it is deemed necessary to protect investors. As amended, Rule 6440 grants FINRA the authority to impose foreign regulatory halts, derivative halts and extraordinary halts.

The author answers the most common questions on Rule 144.

Corporate hijackings of public shell companies–also called corporate identity theft–has been around for more than two decades. The public companies taken over in hijackings have become a valuable assets for shell peddlers (frequently securities lawyers & accountants) seeking reverse merger companies for their clients. They have also become a new target for the SEC.

How FINRA Rule 6490 lmpacts Reverse Mergers

The securities laws provide numerous benefits to issuers who qualify as foreign private issuers including but not limited to reduced disclosure obligations and relaxed financial statement requirements.

Foreign private issuers may raise capital in the U.S. using an offering registered on a registration statement under the Securities Act or by selling securities that are exempt from the SEC’s registration requirements.

On June 10, 2013, the Securities and Exchange Commission (the “SEC”)announced that it had suspended the trading in the securities of Polar Petroleum Corp. a company quoted on the OTC Markets with the symbol POLR.

Private companies in going public transactions that intend to be quoted on the OTC Markets OTCQB must first become reporting with the Securities and Exchange Commission (the “SEC”). This is typically accomplished by the private company filing a Form S-1 registration statement under the Securities Act of 1933, as amended (the “Securities Act”).

The Supreme Court on Friday, 7 of March, delivered its long-awaited decision with regard to the appeals lodged by Laiki’s and BoC’s depositors who lost part of their money in the €10 billion bail-in plan for Cyprus. More than 3.000 appeals of uninsured depositors were filed before the Supreme Court requesting the decision to be revoked.