Category Archives: Public Company Compliance

SEC Charges Attorney with Scheme to Hide Her Role in Preparing False Legal Opinions for Microcap Securities

On Thursday, the Securities and Exchange Commission charged an attorney with fraud for concealing from transfer agents and brokerage firms her involvement in preparing legal opinion letters concerning the sale of certain microcap securities. The SEC alleges that the attorney, Diane D. Dalmy, had been placed on the prohibited attorneys list maintained by OTC Markets Group, Inc., which owns and

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SEC Charges Nine Individuals and Companies for Roles in Microcap Scheme

On March 11, 2019, the Securities and Exchange Commission announced charges against nine individuals and companies in a multi-million dollar stock distribution and market manipulation scheme involving two microcap companies, NanoTech Entertainment, Inc. and NanoTech Gaming, Inc. The SEC’s complaint alleges that David R. Foley, the founder of the NanoTech companies, orchestrated a scheme to manipulate trading in their stock

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Gap In LargeCap And SmallCap Board Diversity Continues To Grow

According to new research from Morningstar, “Small-cap companies are just reaching the level of board gender diversity that the S&P 500 was at a decade ago.” Large-cap board diversity, particularly the boards of S&P 500 companies, continues to increase. Not only are smallcaps’ boards less diverse but the disparity in board gender diversity appears to be increasing through time. The

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SEC Charges Broker-Dealer and Transfer Agent in Microcap Shell Factory Fraud

This week, the SEC announced charges against a broker-dealer, a transfer agent, and three individuals for their roles in the creation of over a dozen undisclosed “blank check” companies from 2009 to 2014. In its complaint, the SEC alleges that broker-dealer Spartan Securities Group, Ltd. and transfer agent Island Capital Management LLC, which does business as Island Stock Transfer, helped

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OTC Markets To Host Discussion On How Government Regulatory Updates and Rulemaking Proposals Could Impact SmallCaps

On February 26th, the CfPA and OTC Markets Group will conduct a moderated discussion on regulatory updates and rulemaking efforts being proposed in Washington D.C. and how they could impact small public companies. Dan Zinn, General Counsel of OTC Markets Group and CfPA Legislative & Regulatory Affairs division member, will moderate the discussion on the initiatives and proposals under consideration

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Two Defendants in SEC Enforcement Action Plead Guilty in Parallel Criminal Case to Charges of Securities Fraud and Lying to the SEC

A former employee of a Boston-based biotech company and a friend of the company’s CEO, whom the Securities and Exchange Commission have charged with stock manipulation and with making false statements and a scheme to defraud, have pleaded guilty in a parallel criminal case to charges of securities fraud and obstructing the SEC’s investigation. On September 7, 2018, Kenneth Stromsland,

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SEC Files Charges Against Magna Group For Microcap Stock Fraud

Last week, the Securities and Exchange Commission announced charges against four individuals and related businesses for their roles in two microcap frauds and unlawful securities offerings. In sum, the alleged illegal transactions resulted in proceeds of more than $25 million. According to the SEC’s complaint, from approximately December 2012 to June 2013, microcap stock financier Magna Group, which was founded

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Court Enters Judgment Against Microcap Company and Two Promoters in Pump-And-Dump Scheme

This week, The Securities and Exchange Commission has obtained final judgments against a microcap company and its two undisclosed promoters who were charged with running a $3.3 million microcap fraud. In September 2017, the SEC charged Jason McDiarmid, Kenneth George Cedric Telford, and Stop Sleep Go, Inc., formerly known as Interactive Multi-Media Auction Corp, with running a pump-and-dump scheme in

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Two Defendants Charged with Lying to the SEC Sentenced in Microcap Fraud Case

A stock promoter and a former chairman of a Massachusetts-based medical diagnostics company previously called Endeavor Power Corp were sentenced in a federal court in Boston, Massachusetts in a related criminal case brought by the Massachusetts U.S. Attorney’s Office. The Securities and Exchange Commission previously charged all three defendants with a scheme to defraud potential investors in Endeavor’s publicly traded

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MicroCap Market Manipulator Sentenced To 87 Months In Prison

On January 30, 2019, David Aubel of North Carolina was sentenced by U.S. District Court Chief Judge Patti B. Saris to 87 months in prison, five years of supervised release and ordered to pay restitution in the amount of $242,553. In November 2017, Aubel pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count

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