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Houston Texas Business Law Firm

Digital currency businessman arrested for securities fraud

Business opportunities are difficult for many Texans to turn away from and part of that is the securities industry. With new products and advancements seemingly coming about every day, there is always a chance and a desire to be involved in the next big thing or a lucrative start-up. However, what many do not realize is that the difficult nature of the securities business can lead to violating - wittingly or not - the federal securities laws. When a person is charged with securities fraud, a mistake they frequently make is thinking that the penalties will not be severe or it is treated less seriously than crimes involving overt theft or violence. When charged with securities offenses, having legal help is imperative to formulate a defense.

A relatively new entity is digital currency. A Texas man was arrested after he was alleged to have cheated investors for more than $4.2 million. The man, 30, is accused of securities fraud and wire fraud. He claimed to have owned a bank platform that was the first of its kind in being decentralized. The investigation says he promised investors that his business gave them banking services and accounts that were protected by the government. The company was not legally able to function in the state, did not have FDIC insurance, and there were no relationships with the banks.

SEC compliance and enforcement requires legal advice

In Texas, when dealing with issues that pertain to the Securities and Exchange Commission as a part of doing business, making a legal mistake can be extensively damaging to the business and individuals who are working in the business. It can also negatively impact everyday investors and those who work as go-betweens and make their money in that capacity. The term "SEC compliance and enforcement" might sound like it encompasses a wide array of issues. That is because it does. Any violation of securities law can cause innumerable problems. When there is an allegation of wrongdoing or concern that the law could have been violated, legal help is a must.

The SEC can conduct investigations and move forward with prosecutions when there is an allegation of violations of federal securities law. There are many issues that can arise with the SEC. That includes allegations of insider trading, claims that market prices were being manipulated, people trying to increase the value of a stock using shady methods and then selling them at a profit (pump and dump), a broker violating fiduciary responsibilities, investors could have had facts misrepresented to them, and unregistered securities could have been sold.

Affirmative defense for an insider trading investigation

Texas businesses and investors are always seeking an advantage to make wise decisions. Getting information - or "tips" as it is often called - can be alluring and seem harmless. However, when the Securities and Exchange Commission believes wrongdoing has taken place and there was inside information shared illegally, it will not hesitate to try and pursue and prosecute those who are alleged to have taken part. Not all cases will result in a person being charged and convicted. There are defenses against these allegations that should be known.

Understanding insider trading and how to lodge a defense against it is key to avoiding hefty penalties. One strategy that can be used is an affirmative defense. With an affirmative defense, if the person can show that the information received did not play a role in the trade decision, it can avoid a violation of the federal securities law and the requisite penalties. There are certain factors that must be in place for affirmative defense to be effective.

Tips for getting a business off the ground

If you’ve considered starting your own business, you’re not alone. Many people dream of being their own boss and taking a good idea to the bank.

Unfortunately, what most people don’t realize is that getting a business up and running takes a lot more than a marketable idea. If you’re considering creating your own business, here are a few things you can do to increase your odds of success:

What whistleblower protections are available under the law?

When when there is an accusation by the Texas government or federal government that a health care provider has been engaging in illegal activities related to it, it will pursue them and penalize them. This is to stop fraud and punish those accused of committing it. Often, the foundation of the case stems from information provided by a whistleblower. For companies that are facing accusations in this regard, part of the defense is to know what whistleblower protection is available to the provider of information as this can be an integral factor in the defense.

In general, qui tam claims are made by an employee who alleges that a company has committed fraud against the government. Since it can negatively impact a worker who is aware of these alleged behaviors to report it, these people are granted whistleblower protection. A justification for the qui tam claim being done anonymously is to protect the whistleblower. Eventually, the person's identity will be revealed one way or the other. Management might be accused of threatening or harassing the employee who reported the alleged wrongdoing. It can result in demotions, abuse and termination.

Prominent businessman accused of SEC violations

For people who are prominent in business dealings in the U.S., it is important to adhere to the law and avoid allegations of wrongdoing by the Securities and Exchange Commission. When it is a publicly-held company and the owner is well-known and prone to making somewhat outrageous promotional statements, the federal government will not hesitate to act if it impacts share prices and is considered against the law. For those in Texas, it is wise to be aware of these stories to avoid making the same mistakes and face SEC violations. Of course, when there are these allegations, legal help is crucial.

The CEO of Tesla, Elon Musk, was sued by the Securities and Exchange Commission because of assertions that he committed SEC violations when he made a public announcement that he intended to take the car company private. The lawsuit states that his comments and failure to disclose certain information confused and disrupted the stock market and damaged investors. The goal is the remove Mr. Musk from directing or being an officer not just for Tesla, but for any publicly traded entity. This can be damaging to him as he also runs SpaceX.

Investment advisor and franchisor accused of securities fraud

Texans who are working in the financial industry or create products related to it must be cognizant of the Securities and Exchange Commission and how it scrutinizes the business. Even when there is a belief that a product or device is completely legal, there could be missteps that violate regulations and lead to an allegation of violating federal securities laws. This is made worse when there are people who have lost money investing complaining about a person or a company's tactics. When there is an arrest for securities fraud or other alleged legal violations, it is imperative to have a strong legal defense.

A man who owns an investment education business and was an investment advisor was charged with fraud by the SEC. According to the SEC, the man raised more than $6 million by telling investors that there would be significant returns. However, he is said to have failed to inform the investors regarding the negative forecasts regarding the business. He is also accused of having made false claims that the notes they purchased were secured. He then allegedly repaid earlier investors using new investor funds. The investors were attracted by false pitches. Some were students of his franchise to educate people on how to invest.

NFL player and comedy writer arrested for SEC violations

When people are earning money from a lucrative job in Texas and throughout the U.S., there is an inevitable desire to take that money and build it into something even more substantial. People who are seeking to make significant profit in by investing will have the same desire. Often, that can lead to making mistakes with securities compliance. The Securities and Exchange Commission is intent on catching those who take part in illegal behaviors when investing including insider trading, manipulating markets and other transgressions. In some cases, familiar names crop up in the investigation and find themselves in trouble with the law and having issues at their job because of it.

Consider liabilities before entering a sole proprietorship

A sole proprietorship is a simple business form in which one person owns the business. It’s common for small, locally-run businesses to start out this way. Operating a business under this formation can be financially beneficial. The owner avoids big corporation taxes. Additionally, there’s no middleman, so owners have complete control in the decision-making process.

Advantages and Disadvantages of an LLC

If you are forming a business, there are many options as to how to proceed. Your choices will depend on the nature of your business, the number of partners, the financing, and how much liability protection you need. Sometimes a simple partnership is adequate, but in other cases a distinct legal entity known as a limited liability corporation (LLC) is your best choice.

In all cases, it's important to consult with an experienced business attorney to help you decide what is best for you. But if you are considering an LLC, there are many advantages and disadvantages which might steer you in this direction.

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The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Important notice: Thomas C. Pritchard is a retired member of Brewer & Pritchard, P.C. Mr. Pritchard's address is 800 Bering Drive, Suite 201, Houston, Texas 77057. Brewer & Pritchard, P.C and Thomas C. Pritchard have shared the cost of this advertisement.

Referrals: Please note that as a general matter, Brewer & Pritchard, P.C. does not handle non-litigation matters. Brewer & Pritchard, P.C. refers all its non-litigation or "transactional" matters to Thomas C. Pritchard, who is a retired member of the firm. Thomas C. Pritchard does not handle any litigation cases and as a general matter, he refers all litigation cases to Brewer & Pritchard, P.C. Brewer & Pritchard, P.C. and Thomas C. Pritchard have no other relationship to each other and do not share fees if or when a case or matter is referred by one to the other.

Not board certified: None of Brewer & Pritchard, P.C., J. Mark Brewer nor Thomas C. Pritchard is certified by the Texas Board of Legal Specialization.

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