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Something Wicked This Way Comes: How to Survive an SEC Investigation or Enforcement Action
Polsinelli PC March 17, 2020Richard B. LevinJason A. NagiPaul J. Roshka
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Introduction
Scope of the SEC’s Jurisdiction
SEC Investigations and Triggering Events
How to Respond to an SEC Investigation
The Value of Cooperation
The Wells Notice
Closing Investigations
Settlement
SEC’s 2020 Examination Priorities and Recent Enforcement Actions
Q&A
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Agenda
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SEC Jurisdiction
The definitions of “security” under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 are nearly
identical and each is broad enough to include the various types of instruments that are used in commercial marketplaces that one
might suspect to fall within the ordinary concepts of a security.
This would include common instruments like stocks, bonds, and notes, as well as the various collective investment pools and common
enterprises devised by persons seeking to generate profits from the efforts and investments of others (i.e. investment contracts and
instruments commonly known as securities).
Section 2(a)(1) of the Securities Act defines a “security” as:
[A]any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, . . . transferable
share, investment contract, . . . any put, call, straddle, option, or privilege on any security, certificate of deposit, . . . or any put, call,
straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or
instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt
for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.
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SEC Jurisdiction
The definition of “security” under the Securities Act does not include currencies.
The SEC has argued that investments in Bitcoin related schemes are investment contracts - a contract, transaction, or schemeinvolving: (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the effortsof the promoter or a third party. Securities Exchange Commission v. W.J. Howey, Co., 328 U.S. 293 (1946); Brotherhood. of Teamsters v.Daniel, 421 U.S. 837, 852 (1979).
Any investment in securities in the United States remains subject to the jurisdiction of the SEC regardless of whether the investment is made inU.S. dollars or a digital currency.
Individuals selling investments are typically subject to federal or state licensing requirements.
Whether a digital asset is a security for the purposes of the Securities Act and the Exchange Act has been at the heart of recent governmentactions against persons engaged in the sale of digital assets.
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SEC Investigations
The SEC is the federal investigative and enforcement arm with respect to the securities activities in the United States.
This presentation provides an overview of SEC investigative and enforcement authority and the most effective way to deal with
SEC investigations and enforcement actions.
If the investigation is concluded without an enforcement action, the pendency of an investigation places a cloud over the
corporation that may inhibit its access to capital markets, chill relationships with vendors and customers, and distract and
demoralize management.
An enforcement action by the SEC may cast doubt on the reputation of the corporation or lead to lawsuits by shareholders or
other persons.
It may ultimately require significant changes in key management, and potential individual liability for the corporation’s officers,
directors, or employees.
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SEC Investigations
SEC investigations are conducted by the Division of Enforcement .
Enforcement Division Staff are located at the SEC’s headquarters in Washington, D.C., and in eleven regional offices.
The Enforcement Division conducts investigations, recommends enforcement actions to the Commissioners, and negotiates
settlements that are subject to approval by the Commissioners.
The Enforcement Division also litigates before SEC Administrative Law Judges and in federal court.
How a company responds to misconduct or to a government investigation will directly affect the SEC’s views of the integrity of the
company and may have a significant impact on the outcome of an investigation.
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Triggering Events
Examples of events that can trigger an investigation include:
Referrals, particularly in the insider trading context, from self-regulatory organizations such as the Financial Industry Regulatory
Authority (FINRA).
Referrals by the Department of Justice under the Foreign Corrupt Practices Act (FCPA).
Newspaper and other media reports.
Complaints from disgruntled investors. Investors frequently complain to the SEC. Sometimes these complaints come from
professional short-sellers.
Complaints from competitors.
Complaints from plaintiffs and their lawyers.
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Informal Investigations
SEC investigations often begin with a request for the corporation’s voluntary cooperation in providing information to the SEC Staff.
While a corporation and its employees are under no obligation to comply with such a request, it is usually in the company’s interest to do so.
Voluntary cooperation will put the company in a more positive light in the Staff ’s consideration of the issues posed by the investigation.
Voluntary cooperation may encourage the SEC Staff not to issue a formal order of private investigation and may possibly reduce the
company’s requirement to disclose the informal inquiry in its periodic filings.
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Informal Investigations
Voluntary cooperation gives the company some degree of control over the scope of the investigation and the amount and type of information
that must be produced.
Whether the company chooses to cooperate once it is advised of an informal inquiry, it should preserve relevant documents.
The destruction of relevant documents in these circumstances could lead to charges of obstruction of justice.
In determining which materials it is obliged to preserve or disclose in an informal inquiry, the company should consider the potential relevance
of the materials to the matters under inquiry, not the informal or formal nature of the inquiry.
Informal investigations are generally closed or converted to an investigation within sixty days.
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Formal Investigations
The federal securities laws permit the SEC to issue subpoenas to compel the production of documents by company or by individuals and to
compel witnesses to appear and to testify under oath in connection with investigations of possible violations of the securities laws.
The SEC commissioners do not conduct these investigations.
They delegate their authority to members of the SEC Staff in the Division of Enforcement
This process is commenced by the issuance of a formal order of private investigation, which sets forth the basis for issuing the order and
the statutory sections that may have been violated.
The formal order also authorizes the staff in the Division of Enforcement to issue subpoenas and compel witnesses to appear under oath.
A formal order is not a finding of a fact or a form of adjudication.
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Formal Investigations
A formal order asserts the possibility of a violation of law by the company, and it may include a wide variety of persons.
Typically, SEC investigations commence with a broad request to the company for the production of documents covering a specified time
period, as well as possible subpoenas.
Such document requests and subpoenas can be narrowed by negotiation in order to prevent an undue burden and the production of
irrelevant documents.
The SEC’s Rules Relating to Investigations provides that a person who is compelled or requested to furnish documentary
evidence or testimony at a formal investigative proceeding shall, upon request, be shown the SEC’s formal order.
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Formal Investigations
Once documents are collected, if the SEC Staff have questions, it will frequently call witnesses to testify regarding the matter.
The SEC may also opt to enter into proffer agreements in order to obtain information and initiate a discussion with witnesses,
including potential cooperating witnesses.
The SEC Staff will interview neutral witnesses without a court reporter.
An SEC investigation may cause persons with whom the company does business to receive a subpoena in the investigation,
which may negatively impact the company’s reputation and business relationships.
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Responding to an SEC Investigation
Alert Senior Management
Consider an internal investigation
Gather Your Internal Response Team
Limit the scope to avoid distractions
Consult with Counsel
Compliance is “voluntary,” unless you:
Receive a subpoena pursuant to a formal order; or
Are a regulated entity, e.g., broker dealer, investment company, or investment adviser or an associated person
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Responding to an SEC Investigation
Freeze
Identify all custodians of information and data
Stop automatic deletion and instruct employees to not delete anything relevant
Preserve all written and electronic records
Obtain Information From the SEC
Copies of Subpoenas
Formal Order of Investigation
Nature and Scope of Inquiry
Communicate with Counsel
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Cooperation
The sliding scale of compliance to defiance
The SEC recognizes cooperation in settlements with the agency
Consider business goals and legal grounds when deciding strategy
Recent ICO settlements confirm the value of cooperation with the SEC
Be honest (of course) and be timely
Unreasonable wagon-circling is not necessary or helpful
If necessary, assert Fifth Amendment privilege against self-incrimination, but know that an adverse inference may be drawn in
civil proceedings and the matter could be referred to the Department of Justice for criminal prosecution.
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Cooperation
The SEC has stressed the role of cooperation in deciding the severity of punishment it will seek against a corporation whose employees are
believed to have been involved in violations of the federal securities laws.
In the Seaboard Report the SEC laid out the factors that are considered in determining whether a company should receive credit for good
cooperation.
The release stressed four key concepts:
Self-policing,
Self-reporting,
Cooperation, and
Remediation
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Cooperation
In evaluating an individual’s cooperation, the Enforcement Division will consider:
Assistance provided by the individual;
Importance of the underlying matter;
Interest in holding the individual accountable; and
Profile of the individual.
The standards track the U.S. Department of Justice considerations for evaluating cooperation.
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Wells Notice
After gathering documents and taking testimony, the SEC Staff typically makes a decision as to whether it will recommend that a particular
company or individual should be charged with a violation of the federal securities laws, which laws are believed to have been violated, and the
nature of the relief to be sought.
In virtually all cases other than those requiring emergency relief, the SEC Staff will contact counsel for the prospective defendant, state its
conclusion, and summarize the basis for that conclusion.
This is known as a Wells Notice.
Counsel has a time-limited opportunity to make a Wells submission which is a brief setting forth factual and legal arguments why an
enforcement action may not be appropriate.
Counsel can meet with the SEC staff before making the Wells submission.
Such a meeting can be a helpful means to obtain greater insight into the evidence the Staff believes supports its theories.
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Wells Notice
The SEC Staff have the discretion, upon request, to allow the prospective defendant and counsel to review non-privileged portions of the
investigative file.
Viewing such information may allow counsel to more intelligently assess the risks of possible enforcement action.
The ultimate decision whether to institute an enforcement proceeding is the Commission’s, based upon the SEC Staff ’s recommendation.
That recommendation usually is a collaborative one.
Meetings with SEC staff and a Wells submission may be appropriate.
Counsel can inform the Staff of facts that may change its recommendation.
If the recommendation is not ultimately changed, counsel and the company may be successful in persuading the Staff that some
defendants should be excluded altogether or that the severity of charges should be reduced.
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Wells Notice
While there are benefits to making a from a Wells submission, there are also disadvantages to making a submission.
Wells submissions are discoverable in private civil litigation.
The SEC considers Wells submissions to be party admissions that can be used by the SEC in any future litigation.
A Wells submission may also provide the SEC with a “roadmap” to the defense in the event of litigation.
Federal prosecutors may obtain Wells submissions pursuant to an information request from the SEC and make use of the Wells
submission in a parallel criminal proceeding.
Counsel should consider the risks and benefits of making a Wells submission and carefully consider the content of the submission.
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Wells Notice
If the potential defendant is unsuccessful in persuading the SEC Staff, they sends their recommendation in the form of a memorandum
together with the Wells submission, to the SEC Commissioners.
In a meeting open to the SEC Staff, but not to the public or to the prospective defendants, the SEC Commissioners decide whether an
enforcement action should be commenced.
Once that decision is made, counsel is usually advised of it and afforded a brief opportunity to determine whether to negotiate a
resolution of the case or to contest it.
It is possible to engage with the SEC Staff in a pre-Wells process in which counsel may make a submission akin to a Wells submission
and engage in a dialogue with the Staff, but without the receipt of a formal Wells notice.
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Closing Investigations
The SEC has adopted a policy to send termination letters to the individuals, entities, or their counsel “at the earliest opportunity” when
the Staff determine not to recommend an enforcement action against them.
The SEC’s policy is to send termination letters regardless of whether the investigation was pursuant to a formal order.
The SEC Enforcement Manual provides that a termination letter
must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from
the staff ’s investigation of that particular matter. All that such a communication means is that the staff has completed its
investigation and that at that time no enforcement action has been recommended to the Commission.
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Settlement
Settlement is not the same as “giving up”
Do not let emotions cloud your business judgment
Stops the legal fee bleed
Litigation is incredibly expensive
Provides a measure of finality
Remove the distraction of dealing with lawyers
Allows for a measure of control over the process
You decide or a judge will decide it for you
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2020 SEC Examination Priorities
Earlier this year the SEC Office of Compliance Inspections and Examinations (OCIE) published the Examination Priorities of the SEC
staff for 2020.
The examination priorities letter is a useful resource for all broker-dealers, registered investment advisers, and FinTech firms because
it presents a window into the areas of focus of the OCIE staff.
In the letter the SEC staff noted they will be focusing on FinTech and innovation, including digital assets and electronic investment
advice.
The SEC noted:
Innovations and advancements in financial technologies, methods of capital formation, market structures, and investor interfaces
continue to grow at a rapid pace. . . . OCIE remains focused on keeping abreast of these developments, and examinations will focus
on firms’ use of these data sets and technologies to interact with and provide services to investors, firms, and other service providers
and assess the effectiveness of related compliance and control functions.
https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2020.pdf
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2020 SEC Examination Priorities
Digital Assets
The digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the
differences between these assets and more traditional products.
OCIE will continue to identify and examine SEC-registered market participants engaged in this space.
Examinations will assess: (1) investment suitability, (2) portfolio management and trading practices, (3) safety of client funds and assets,
(4) pricing and valuation, (5) effectiveness of compliance programs and controls, and (6) supervision of employee outside business
activities.
Electronic Investment Advice
OCIE will continue its focus on RIAs that provide services to their clients through automated investment tools and platforms, often referred to
as “robo-advisers.”
Areas of focus include: (1) SEC registration eligibility, (2) cybersecurity policies and procedures, (3) marketing practices, (4) adherence to
fiduciary duty, including adequacy of disclosures, and (5) effectiveness of compliance programs.
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2020 SEC Examination Priorities
Transfer Agents
Transfer agents serve as agents for securities issuers and play a critical role in the settlement of securities transactions.
Key functions of transfer agents include, maintaining issuers’ security holder records, recording changes of ownership, canceling and issuing
certificates, distributing dividends and other payments to security holders, and facilitating communications between issuers and security
holders.
OCIE will continue to examine transfer agents’ core functions, including: the timely turnaround of items and transfers, recordkeeping and
record retention, and safeguarding of funds and securities.
OCIE examinations will also focus on the requirement for transfer agents to annually file a report by an independent accountant concerning
the transfer agent’s system of internal accounting controls, as well as compliance with obligations to search for lost security holders and
provide notice to unresponsive payees.
Examination candidates will include transfer agents that serve as paying agents for issuers, transfer agents developing blockchain
technology, and transfer agents that provide services to issuers of microcap securities, private offerings, crowdfunded securities, or digital
assets.
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Telegram
The SEC filed an emergency action and obtained temporary restraining order against two offshore entities conducting an
alleged unregistered, ongoing digital token offering in the U.S. and overseas that has raised more than $1.7 billion of investor
funds.
The SEC alleges Telegram and its wholly-owned subsidiary TON Issuer began raising capital in January 2018 to finance the
companies’ business, including the development of their own blockchain, the “Telegram Open Network” or “TON Blockchain,” as well
as the mobile messaging application Telegram Messenger.
The SEC claims the defendants sold approximately 2.9 billion digital tokens called “Grams” at discounted prices to 171 initial
purchasers worldwide, including more than 1 billion Grams to 39 U.S. purchasers.
The SEC alleges Telegram promised to deliver the Grams to the initial purchasers upon the launch of its blockchain by no later than
October 31, 2019, at which time the purchasers and Telegram will be able to sell billions of Grams into U.S. markets.
The SEC claims the defendants failed to register their offers and sales of Grams, which are securities, in violation of the registration
provisions of the Securities Act.
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Block.one
The SEC settled charges against blockchain technology company Block.one for conducting an unregistered initial coin
offering (ICO) of digital tokens that raised the equivalent of several billion dollars over approximately one year.
The company agreed to settle the charges by paying a $24 million civil penalty.
Block.one which has operations in Virginia and Hong Kong, conducted an ICO between June 2017 and June 2018.
The order found that Block.one stated it would use the capital raised in the ICO for general expenses, and also to develop software
and promote blockchains based on that software.
Block.one’s offer and sale of 900 million tokens began shortly before the SEC released the DAO Report of Investigation and continued
for nearly a year after the report’s publication, eventually raising several billion dollars' worth of digital assets globally, including a
portion from US investors.
Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an
exemption from the registration requirements.
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ICOBox
The SEC sued ICOBox and its founder Nikolay Evdokimov for conducting an illegal $14 million securities offering of ICOBox’s digital
tokens and for acting as unregistered brokers for other digital asset offerings.
According to the SEC, ICOBox raised funds in 2017 to develop a platform for initial coin offerings by selling, in an unregistered
offering, roughly $14.6 million of “ICOS” tokens to over 2,000 investors.
The complaint alleges that defendants claimed the tokens would increase in value upon trading and that ICOS token holders would be
able to swap them at a discount for other tokens promoted on the ICOBox platform. According to the complaint, the ICOS tokens are
virtually worthless.
The complaint also alleges that ICOBox failed to register as a broker but acted as one by facilitating initial coin offerings that
raised more than $650 million for dozens of clients.
The SEC’s complaint charges ICOBox and Evdokimov with violating the registration requirements of the federal securities laws and
seeks injunctive relief, disgorgement with prejudgment interest, and civil money penalties.
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Bitqyck
The SEC settled charges with Bitqyck and its founders, who allegedly defrauded investors in securities offerings of two digital assets, Bitqy and
BitqyM, and operated an unregistered exchange to permit trading in one of them, a digital token called Bitqy.
According to the SEC, Bitqyck and founders Bruce Bise and Sam Mendez created and sold Bitqy and BitqyM in unregistered securities
offerings to more than 13,000 investors, raising more than $13 million.
Investors allegedly received $4.5 million for referring new investors to Bitqyck but collectively lost more than two-thirds of their investment in
the Dallas-based company.
Bitqyck, aided and abetted by its founders, also is alleged to have illegally operated TradeBQ, an unregistered national security exchange
offering trading in a single security, Bitqy.
Without admitting or denying the allegations, Bitqyck, Bise and Mendez consented to final judgments agreeing to all the injunctive relief.
Bitqyck also consented to an order requiring that it pay disgorgement, prejudgment interest and a civil penalty of $8,375,617 and
Bise and Mendez consented to the entry of an order that they each pay disgorgement, prejudgment interest and a civil penalty of
$890,254 and $850,022, respectively.
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ICO Rating
ICO Rating agreed to pay $268,998 to settle charges that it failed to disclose payments received from issuers for publicizing their
digital asset securities offerings.
The SEC's order found that between December 2017 and July 2018, ICO Rating produced research reports and ratings of blockchain-
based digital assets, including “tokens” or “coins” that were securities, and published this content on its website and on social media.
ICO Rating billed itself as “a rating agency that issues independent analytical research,” and stated that its mission is “to help
the market achieve the necessary standards of quality, transparency and reliability.” However, ICO Rating failed to disclose that it was
paid by certain issuers whose ICO offerings it rated.
ICO Rating violated the anti-touting provisions of Section 17(b) of the Securities Act.
ICO Rating agreed to cease and desist from committing or causing any future violations of these provisions, to pay disgorgement and
prejudgment interest of $106,998, and a civil penalty of $162,000.
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SimplyVital Health
The SEC settled charges against a New England-based blockchain company for offering and selling approximately $6.3 million of
securities to the public in unregistered transactions.
SimplyVital Health publicly announced its plan to conduct an ICO to raise money to further its development of Health Nexus, a
"healthcare-related blockchain ecosystem."
SimplyVital offered a new token called Health Cash, or HLTH, which would be used as currency in the Health Nexus.
SimplyVital concurrently announced that it would conduct a “pre-sale” of its HLTH tokens, in which it offered investors
Simple Agreements for Future Tokens, or SAFTs, under which it sold HLTH tokens that would not be delivered to investors
unless and until created by SimplyVital.
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SimplyVital Health
SimplyVital did not file a registration statement with the SEC or qualify for an exemption from registration before offering and
selling HLTH to the public through the SAFTs.
SimplyVital raised approximately $6.3 million from its unregistered sale of securities in between September 2017 and April
2018.
After concluding its pre-sale in April 2018, SimplyVital ultimately decided not to offer and sell HLTH during its scheduled ICO.
In 2019, SimplyVital voluntarily returned to investors substantially all of the funds raised during its pre-sale.
SimplyVital violated the registration provisions of Sections 5(a) and (c) of the Securities Act.
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Middleton
The SEC announced fraud charges against a Brooklyn individual and two entities under his control who allegedly engaged in a
fraudulent scheme to sell digital securities to investors and to manipulate the market for those securities.
The court entered an emergency freeze to preserve at least $8 million of the $14.8 million the defendants raised in 2017 and
2018 in an offering of digital securities.
The SEC claims the Defendants marketed and sold securities called “VERI” tokens on the internet, inducing retail investors to invest
based on multiple material misrepresentations and omissions.
The Defendants allegedly knowingly misled investors about their prior business venture and the use of offering proceeds, touted
oversized – but fictitious – investor demand for VERI, and claimed to have a product ready to generate revenue when no such product
existed.
The SEC claims Middleton and Veritaseum with violating the registration and antifraud provisions of the U.S. federal securities laws,
and Middleton with additionally violating the antifraud provisions on the basis of his manipulative trading.
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Longfin
The SEC filed a fraud action against Longfin and its CEO for falsifying the company’s revenue and, together with a former Longfin
consultant, for fraudulently securing the company’s listing on Nasdaq.
The SEC’s prior charges against these defendants and two others resulted in a preliminary injunction freezing more than $27
million in allegedly illegal trading proceeds from unregistered distributions of Longfin stock.
The SEC claims Longfin and its CEO, conducted a fraudulent public offering of Longfin shares.
The complaint alleges that Longfin and the CEO obtained qualification for a Regulation A+ offering by falsely representing in SEC
filings that the company was principally managed and operated in the U.S. when, in fact, the company’s operations, assets and
management remained offshore.
Longfin and the CEO then engaged in a fraudulent scheme by distributing over 400,000 shares of Longfin to insiders and affiliates to
meet certain Nasdaq listing criteria, without obtaining payment for any of these shares and, along with a Longfin consultant
misrepresented to Nasdaq the number of qualifying shareholders and shares sold in the offering.
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Longfin
The SEC’s complaint alleges that Longfin and the CEO also engaged in an accounting fraud, recording more than $66 million in sham
revenue, representing nearly 90% of Longfin’s total 2017 reported revenue.
The SEC’s prior action alleged that Longfin, Meenavalli, Altahawi, and two affiliated individuals, Dorababu Penumarthi and Suresh
Tammineedi, illegally distributed and sold more than $33 million of Longfin stock in unregistered transactions.
Altahawi, Penumarthi, and Tammineedi agreed to settlements that would fully resolve the SEC’s charges and have agreed to
surrender the previously frozen funds towards paying monetary relief.
The proposed settlement would require Altahawi to return $21 million of allegedly ill-gotten gains, pay a $2.9 million penalty,
and surrender all his Longfin shares.
The proposed settlements require Penumarthi to pay more than $1.7 million and Tammineedi to pay more than $241,000, in
addition to injunctive relief.
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Kik Interactive
The SEC sued Kik Interactive for conducting an illegal $100 million securities offering of digital tokens.
The SEC claims Kik sold the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.
The SEC alleges Kik had lost money for years on its sole product, an online messaging application, and the company’s management
predicted internally that it would run out of money in 2017.
In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens.
Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from
U.S. investors.
The SEC alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.
The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity.
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Kik Interactive
Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that
demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to
reward other companies that adopt Kin.
At the time Kik offered and sold the tokens, the SEC alleges these services and systems did not exist and there was nothing to
purchase using Kin.
Kik also allegedly claimed that it would keep three trillion Kin tokens, Kin tokens would immediately trade on secondary markets, and
Kik would profit alongside investors from the increased demand that it would foster.
The Kin offering involved securities transactions, and Kik was required to comply with the registration requirements of the U.S.
securities laws.“
The SEC charges Kik Interactive with violating the registration requirements of Section 5 of the Securities Act.
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Floyd Mayweather, Jr.
The SEC announced settled charges against professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled, known as DJ
Khaled, for failing to disclose payments they received for promoting investments in ICOs.
These were the SEC's first cases to charge touting violations involving ICOs.
The SEC's orders found that Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from
Centra Tech Inc., and that Khaled failed to disclose a $50,000 payment from Centra Tech, which he touted on his social media
accounts as a “Game changer.”
Mayweather's promotions included a message to his Twitter followers that Centra's ICO “starts in a few hours. Get yours before they sell out,
I got mine…”
A post on Mayweather's Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said:
“You can call me Floyd Crypto Mayweather from now on.”
The SEC order found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.
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Floyd Mayweather, Jr.
Mayweather and Khaled’s promotions came after the SEC issued its DAO Report in 2017 warning that coins sold in ICOs may be securities
and that those who offer and sell securities in the U.S. must comply with federal securities laws.
Without admitting or denying the findings, Mayweather and Khaled agreed to pay disgorgement, penalties and interest.
Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest.
Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.
Mayweather agreed not to promote any securities, digital or otherwise, for three years, and Khaled agreed to a similar ban for two years.
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Polsinelli’s FinTech and Regulation Practice
Polsinelli’s FinTech and Regulation Practice helps clients meet the challenges posed by the development of these new technologies, including
digital assets and ICOs.
Bringing together attorneys from across the firm, members of the FinTech and Regulation practice advise clients on a variety of matters, including:
Corporate and transactional issues
Cybersecurity
Government investigations and compliance
Intellectual property
Labor and employment
Litigation
Public policy
Regulation by the CFTC, the SEC and FinCEN
Securities and corporate finance
Tax
Polsinelli’s FinTech and Regulation Practice has been rated by Chambers as one of the best FinTech practices in the United States.
https://www.polsinelli.com/industries/financial-technology-fintechhttps://chambers.com/department/polsinelli-pc-fintech-legal-fintech-49:2744:225:1:65601
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Contact
To learn more about our FinTech and Regulation practice, or to contact a member of our team, click here or visit our website at polsinelli.com.
For additional information, please call:
Richard B. Levin
Shareholder and Chair FinTech and Regulation Practice
Tel. 303-583-8261
Email: [email protected]
Jason A. Nagi Paul J. Roshka
Shareholder Shareholder
Tel. 212-644-2092 Tel. 602-650-2098
Email: [email protected] Email: [email protected]
http://www.polsinelli.com/industries/financial-technology-fintechhttp://www.polsinelli.com/mailto:[email protected]:[email protected]:[email protected]
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Polsinelli is very proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that
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polsinelli.com
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real people.
Areas of Focus
Financial Technology (FinTech) and
Regulation
Financial and Securities Litigation
Government Investigations
Public Policy
Securities & Corporate Finance
Technology
Financial Regulatory Enforcement
Technology Transactions
International
Education
J.D., University of Denver Sturm College
of Law, 1996, Managing Editor
University of Denver Law Review
B.A., Colorado College, 1992, History
Bar Jurisdictions
District of Columbia, 2003
Colorado, 1996
Registered Foreign Lawyer - SRA,
England and Wales, 2016
Court Admissions
U.S. District Court, District of Colorado,
1997
U.S. Court of Appeals, Tenth Circuit,
1997
State of Colorado, 1996
real perspective.SM
Richard B. LevinChair Financial Technology & Regulatory [email protected], Washington, D.C.303.583.8261
"I invest in each client by learning about their business."
OverviewRichard Levin is the Chair of Polsinelli’s Chambers rated FinTech and Regulation Practice. He
brings his experience as a senior legal and compliance officer on Wall Street and in London to
bear in advising clients on corporate, securities and regulatory issues. A problem-solver by nature,
his practice focuses on helping financial services and technology (FinTech) clients identify and
address regulatory issues as they build their businesses.
The FinTech sector is experiencing rapid changes that are producing innovative new technologies:
digital currencies, blockchain technology, peer to peer lending, robo advisors, crowdfunding
portals, and electronic trading platforms. These changes are challenging early stage companies
and established financial services firms to understand the legal and regulatory issues associated
with the development of these innovative technologies. Polsinelli is at the vanguard of these
changes.
Richard’s practice focuses on the representation of early stage and publicly traded companies in
the FinTech space, including investment banks, broker-dealers, investment advisers, peer to peer
lending platforms, digital currency trading platforms, alternative trading systems (ATSs), and
exchanges. He has been advising these clients on legal and regulatory issues since the start of
electronic trading in the late 1990s.
Before entering private practice, Richard served as the Global Head of Product Development for
Compliance and Operations for a leading global investment bank and as General Counsel and
Chief Compliance Officer of three U.S. ATSs and a U.K. based multi-lateral trading facility (MTF).
He played a leadership role in the launch of two successful joint ventures of leading global
investment banks. Richard began his career on Wall Street by serving as the General Counsel of
one of the original Electronic Communications Networks (ECNs), and as Assistant General Counsel
and Regulatory Affairs Officer of the largest Nasdaq market maker. His current and past clients
include leading national financial institutions, multinational financial services holding companies,
and institutions engaging in global investment banking, investment management, securities, and
other financial services with institutional clients. Richard has represented clients before regulators
in Canada, Hong Kong, Japan, and the United Kingdom.
Before joining Polsinelli Richard was the co-chair and founder of the Digital Currency Team of a
leading U.S. law firm. Richard is a frequent speaker at conferences on blockchain technology,
digital assets, regulatory, and market structure issues and is the co-author of several chapters of
books, including the chapter on U.S. regulation of virtual currencies for the Handbook of Digital
Currency, the chapter on SEC and CFTC regulation of blockchain technology for the Handbook of
Blockchain, Digital Finance, and Inclusion – both published by Elsevier, Code is Not Law: Code
Can be a Language Used to Create Smart Contracts, a chapter in Blockchain in Financial Markets
-
and Beyond, and the chapter on regulation of robo advisers in WealthTech – Wealth Management
in the FinTech Age. Richard was recently identified as one of twelve leading lawyers in Blockchain
and Cryptocurrencies by Chambers Global.
DistinctionsRanked by Chambers and Partners for Blockchain & Cryptocurrencies - Global-Wide
2017-2020
MembershipsAmerican Bar Association
Bar Association of the District of Columbia
Chamber of Digital Commerce – Lawyers Committee
Colorado Bar Association
National Committee on U.S. – China Relations
Securities Industry Financial Markets Association: Legal and Compliance Division
Wall Street Blockchain Alliance
Key MattersRoutinely represents new ATS before the SEC and FINRA.
Represented the first ATS focused on infrastructure investments before the SEC and FINRA
during the ATS application process.
Advised the developer of a U.S. ATS in negotiations with the African Development Bank
(ADB) related to the formation of a joint venture to develop and operate an African
infrastructure development platform.
Represented the U.S. investment banking subsidiary of a leading global bank in a state
securities regulatory action involving more than $20 billion in securities transactions. As part
of settlement, the client avoided potential negative publicity and was permitted to register as
a broker-dealer.
Counseled the U.S. subsidiary of a European investment bank after it failed to report several
thousand transactions over a three-year period to FINRA. Successfully negotiated a
settlement with FINRA that avoided substantial monetary sanctions and negative publicity.
Advised the client in the implementation of remedial measures to address potential future
violations.
Represented a U.S. investment bank in a FINRA enforcement action involving anti-money
laundering compliance and research issues. Successfully negotiated a settlement with
FINRA.
Advised several early stage companies that planned to operate platforms for the sale of
unregistered securities under Rule 506 and the proposed crowdfunding rules.
Represented two early stage companies that planned to establish new SEC registered
securities exchanges.
Counseled U.S. broker-dealer subsidiaries of several European and Asian banks in FINRA
regulatory matters.
Advised an early stage company launching a virtual currency trading platform.
Represented several peer-to-peer lending platforms before the SEC and state securities
regulators.
Represented several regulated investment advisors before the SEC and state securities
regulators.
Represented a family office before the CFTC with respect to commodity pool operator status.
Lobbied on behalf of a broker-dealer and ATS that supported the JOBS Act.
Advised boards of directors and management on general corporate, securities, mergers and
acquisitions and intellectual property matters in the U.S. and abroad.
-
IntelligenceHow to Survive an SEC Investigation or Enforcement Action
March 17, 2020
BitBlog Bi-Weekly Update
Co-author, Polsinelli BitBlog
March 4, 2020
Under Siege - Zen Master Steven Seagal Loses to the SEC
Co-Author, Polsinelli BitBlog
February 27, 2020
Blockchain Litigation Year In Review (Part 2): Lessons From 2019 And What’s Ahead For 2020
February 19, 2020
Blockchain Litigation Year in Review (Part 1): Lessons From 2019 And What’s Ahead For 2020
February 19, 2020
Let Slip the Dogs of War…the SEC vs. Telegram
January 17, 2020
Wind of Change - The Year FinTech Came in From the Cold Polsinelli BitBlog: Year End Edition
Co-Author, Polsinelli BitBlog
January 2, 2020
AI, Blockchain & Smart Contracts in Health Care
December 4, 2019
BitBlog Weekly Update
Co-Author, Polsinelli BitBlog
October 29, 2019
Polsinelli’s Levin on Regulating Facebook’s Libra
TV Interview, Bloomberg Markets Balance of Power
October 25, 2019
Balance of Power: Digital Currency, Trump Impeachment (Podcast)
Mentioned, Bloomberg
October 23, 2019
BitBlog Weekly Summary
Co-Author, Polsinelli BitBlog
October 1, 2019
CME Group Plans To Launch Bitcoin Options Early Next Year
Quoted, Law360
September 20, 2019
FINRA and SEC Issue Joint Statement on Security Token and Custody Rules
Co-Author, Polsinelli BitBlog
September 13, 2019
BitBlog Weekly Summary
Co-Author, Polsinelli BitBlog
September 6, 2019
Telegram Pushes Ahead with Plans for Cryptocurrency
Quoted, San Francisco Chronicle
August 30, 2019
-
As Facebook's Libra Hit with Scrutiny, Telegram to Launch its Own Cryptocurrency
Quoted, The Sydney Morning Herald
August 29, 2019
As Facebook's Libra Hit with Scrutiny, Telegram to Launch its Own Cryptocurrency
Quoted, WA Today
August 29, 2019
As Facebook's Libra Hit with Scrutiny, Telegram to Launch its Own Cryptocurrency
Quoted, The Age
August 29, 2019
#CryptoCorner: Gemini Joins Silvergate Exchange Network, Telegram to Issue Digital CurrencyWithin Two Months, Swiss Crypto Firm Sygnum Aiming for Banking License in Singapore
Quoted, Investor Ideas
August 28, 2019
Telegram’s Cryptocurrency Stays On Course For Its Launch
Quoted, Inside Bitcoins
August 28, 2019
Telegram Pushes Ahead With Plans for ‘Gram’ Cryptocurrency
Quoted, The New York Times
August 27, 2019
BitBlog Weekly Summary: Digital Asset Regulations in New York State
Co-Author, Polsinelli BitBlog
August 23, 2019
A Pocketful of Quarters: SEC Provides Digital Asset Offering Guidance
Co-Author, Polsinelli BitBlog
August 5, 2019
Time To Kik SAFTS To The Curb
Author, BlockTribune
June 25, 2019
Polsinelli FinTech Chair Richard B. Levin to Speak at the Smart Regulation and the Future ofFinancial Regulation Conference at the Antonin Scalia Law School of George Mason University
Presenter
May 16, 2019
Polsinelli FinTech Chair Richard B. Levin to Speak at the Asian Leadership Conference
Presenter
May 15, 2019
Crypto-Miners: Are They Broker-Dealers or Math Geeks?
Quoted, FinOps Report
May 7, 2019
Polsinelli FinTech Chair Richard B. Levin to Moderate at Rocky Mountain Securities Conference
Moderator
May 3, 2019
Crypto Attorneys Weigh in on SEC Token Framework
Quoted, Brave New Coin
April 13, 2019
-
A “Token” of Appreciation – Take 1: Blockchain Technology and Digital Crypto-Assets:Temporary Hype or the Dawn of a New Era of Disruptive Technologies?
Panelist, ABA Section of International Law Conference, Washington, D.C.
April 9 -12, 2019
Polsinelli FinTech Chair Richard B. Levin to Moderate at DC Blockchain Summit
March 7, 2019
Winklevoss-founded crypto exchange Gemini secures critical third-party test of its securityand design
Quoted, MarketWatch
January 29, 2019
Colorado wants to be an epicenter of blockchain technology. Can it succeed?
Denver Business Journal
Quoted, Denver Business Journal
December 6, 2018
Polsinelli Shareholder Richard B. Levin to Present at Chambers FinTech Seminar - 11.20.2018
Presenter
November 20, 2018
Polsinelli FinTech Chair Richard B. Levin and Principal Colby B. Springer to Present at WIPF inNew Delhi, India - 11.14-16-2018
Presenter
November 14 - 16, 2018
Polsinelli Shareholder Richard B. Levin to Moderate a FinTech Panel in Singapore - 11.14.2018
Moderator
November 14, 2018
SEC Charges ICO Token Offering Platform as an Unregistered Broker-Dealer
Co-author, Polsinelli BitBlog
November 5, 2018
SEC Charges Unlicensed Bitcoin-Funded Swap Dealer and CEO
Co-Author, Polsinelli BitBlog
November 2, 2018
Polsinelli FinTech Chair Rick Levin to Present at NSCP National Conference - 10.30.2018
Presenter
October 30, 2018
SEC Launches New Strategic Hub for Innovation and Financial Technology
Co-author, Polsinelli BitBlog
October 26, 2018
SEC Suspends Trading in Company Making False Cryptocurrency-Related Claims About SECRegulation and Registration
Co-author, Polsinelli BitBlog
October 25, 2018
Fidelity's Foray Into Bitcoin Likely To Boost Crypto Appeal
Quoted, Law360
October 18, 2018
Crypto-assets Do Not Pose a Material Risk to Global Financial Stability
Author, Polsinelli BitBlog
October 11, 2018
-
SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval
Co-Author, Polsinelli BitBlog
October 11, 2018
Court Denies Defendants' Motion to Dismiss in Commodity Fraud Case Involving the VirtualCurrency My Big Coin
Co-Author, Polsinelli BitBlog
October 11, 2018
SEC To Reconsider Staff's Rejection Of 9 Bitcoin ETFs
Quoted, Law360
August 24, 2018
ProShares Bitcoin-Backed ETF Decision is Due Thursday
Quoted, MarketWatch
August 22, 2018
Even Free Tokens Face Regulatory Heat as Coin Offerings Scrutinized
Quoted, The Wall Street Journal
August 14, 2018
SEC Delay on Cryptocurrency ETF is More a Speed Bump Than a Red Flag, Market Insiders Say
Quoted, MarketWatch
August 8, 2018
Decoding Cryptocurrency
Quoted, Business Jet Traveler
July 2018
Crypto Influencers Pump Up Markets With $105,000 Tweets
Quoted, Bloomberg
June 26, 2018
Wells Fargo Brokers Loved Structured Notes
Quoted, Bloomberg
June 26, 2018
Panel Discussion: Putting Blockchain Solutions into Production
Presenter, SIFMA Fintech Conference, New York, NY
June 20-21, 2018
'It was true for tulips, junk bonds, and mortgage-backed securities, and now crypto': There's abig shakeup happening in the ICO market, and it should be keeping investors up at night
Quoted, ThisInsider
June 19, 2018
New Development inTechnology
Presenter, National Society of Compliance Professionals (NSCP) Spring Conference, Chicago, IL
June 4, 2018
SEC launches HoweyCoins — an ICO Investment Satire Intended to Educate Gullible InvestorsAbout ICO Scams
BraveNewCoin
May 23, 2018
Initial Coin Offerings (ICOs) and Cryptocurrency (FinTech Track)
Speaker, 2018 FINRA Annual Conference. Washington, D.C.
May 21-23, 2018
-
Blockchain Technology & Cryptocurrencies
Moderator, Video Game Bar Association (VGBA) Summit, Los Angeles, CA
May 14-15, 2018
Polsinelli Shareholder Richard B. Levin to Present at Rocky Mountain Securities Conference
May 11, 2018
What is a SAFT? A Crypto Fundraising Method Drawing Regulatory Scrutiny
Quoted, MarketWatch
May 10, 2018
Startups Love This Cryptocurrency Strategy. Regulators Say Not So Fast
Quoted, Wall Street Journal
April 24, 2018
How the Syndicated Loan Market Is Dealing with the Potential Replacement of LIBOR
April 20, 2018
Major VC Firm Asked SEC to Not Categorize Cryptocurrency as Security
Quoted in News BTC
April 20, 2018
Venture Capitalists Seek ‘Safe Harbor’ for Virtual Currencies
Featured in The New York Times
April 19, 2018
Cryptocurrency Firm Coinbase in Talks to Become SEC-Regulated Brokerage
Featured in Wall Street Journal
April 6, 2018
How FinTech Could Reboot LIBOR
April 2018
Initial Coin Offerings: Can Regulators Curb the Risks?
Featured in Fair Observer
April 1, 2018
Initial Coin Offerings: Can Regulators Curb the Risks?
Featured in Wharton e-Newsletter
March 27, 2018
How Law Firms Can Prepare for FinTech Wave
New York Law Journal
March 26, 2018
Research Paper Says Issuers of ICO Tokens Will Face Class Action Lawsuits
March 2018
Cryptocurrency Issuers Clean Up, Shun US investors as SEC Gets Tough
CNBC
March 21, 2018
Blockchain: Coming to a CMBS Near You
March 12, 2018
Cryptocurrency Class Action Lawsuits: A New Frontier
March 2018
-
Shareholder Richard B. Levin to Present at Chamber of Digital Commerce DC
Presenter, Chamber of Digital Commerce DC Blockchain Summit
March 5, 2018
Crypto Markets Are Young, Hungry and Just Getting Started
February 22, 2018
Issuers of Tokens Beware: Class Action Lawsuits Are Coming
February 2018
Rick Levin on Cryptocurrency Crime: The Days of Crypto-Anarchy are Numbered
CoinGeek
February 20, 2018
ICO Rules and Regs: Initial Coin Offerings Under Regulatory Spotlight
Featured in John Lothian News
February 16, 2018
Polsinelli Shareholder Richard B. Levin to Moderate at CryptoCon 2018
Moderator, CryptoCon 2018
February 15, 2018
Blockchain Explained: It Builds Trust When You Need It Most
Featured in CNET
February 12, 2018
Regulations & Global Jurisdictions Panel
Presenter, London Blockchain Week 2018
January 23, 2018
Will Bitcoin Futures Legitimize Cryptocurrencies?
Featured in U.S. News & World Report
December 14, 2017
Bitcoin Futures Just Hit Wall Street, and the Price is Surging
Featured in Yahoo Finance
December 11, 2017
Bitcoin Futures Bring Digital Currencies To Wider Market
Featured in Law360
December 11, 2017
Who Controls Your Bitcoin? Why All That New Wealth Isn’t Really In Your Hands
Featured in Verdict
December 11, 2017
Is it Time For Bankers to Rethink Bitcoin?
Featured in American Banker
November 30, 2017
How Global Regulators Are Looking to Regulate Digital Assets
Featured in Business News Network
November 30, 2017
Nasdaq Prepares Launch of Bitcoin Futures Early Next Year
Featured in Traders Magazine
November 30, 2017
-
Top Bitcoin Exchange Site Keeps Crashing as Bitcoin Surge Reaches $11,000
Featured on Yahoo News
November 29, 2017
Overview of FinTech
Presenter, Multilaw FinTech webinar
November 29, 2017
AI and Identity RegTech
ID/AI Conference - Singapore FinTech Festival
November 17, 2017
ICO Regulation and Investment
Inclusive Blockchain Conference - Singapore FinTech Festival
November 15, 2017
Webinar: Blockchain in Health Care - Basics, Smart Contracts, and Other Applications
November 9, 2017
Blockchain in Health Care - The Basics, Smart Contracts, and Other Applications
November 9, 2017
Bitcoin Moves Toward Financial Mainstream with Futures Contracts
Featured in American Banker article
November 1, 2017
Bitcoin: The Future of Money
Presenter, World Knowledge Forum
Seoul, Korea
October 18, 2017
Bitcoin: The Future of Money
Co-Presenter, World Knowledge Forum; Seoul, Korea
October 18, 2017
China Crypto Will Be “Bigger Than Bitcoin”
Featured in BlockTribune article
September 15, 2017
FinTech Regulation is Not a Zero Sum Game
September 2017
SEC Bulletin May Bring Order To Wild West ICO Market
Featured in Investor's Business Daily
August 26, 2017
ICOs and Other Hot Things in Digital Currencies
Co-Presenter, FinTech Canada Conference
August 18, 2017
U.S. Regulators Enter the FinTech Sandbox
July 2017
Innovation in FinTech and Dispelling the Myth that Regulations Will Stifle Innovation
Panelist, 2017 Western Regional Conference
National Asian Pacific American Bar Association
San Jose, California
July 21, 2017
-
real people.
Areas of Focus
Bankruptcy and Restructuring
Bankruptcy & Financial Distress
Litigation
Financial Services
Financial Technology (FinTech) and
Regulation
Insolvency
Litigation and Dispute Resolution
Financial Services Litigation
Commercial Litigation
Education
J.D., Brooklyn Law School, 2000, Moot
Court Honor Society
B.A., cum laude, New York University,
1997, with honors in English
Bar Jurisdictions
New Jersey
New York
Court Admissions
U.S. District Court, Southern District of
New York
U.S. District Court, District of New Jersey
U.S. District Court, Eastern District of
New York
U.S. District Court, Northern District of
New York
real perspective.SM
Jason A. [email protected] York212.644.2092
"I work to understand the economic and non-economic driversunderlying each matter, to best meet our client’s goals."
OverviewJason Nagi charts a path to victory for each of his clients. Jason uses his creditor-focused, finance
experience to counsel early stage and mature FinTech companies as well as traditional and
non-traditional lenders, in both business ventures and litigation. In addition to appearing before
state courts, and U.S. federal district and bankruptcy courts, Jason regularly counsels companies in
applying blockchain technology to their respective industries, fundraising efforts, and regulatory
issues. Jason advises clients on SEC, CFTC, FinCEN, and state-level MSBs, including the
issuance of securitized digital assets.
Jason represents securitized lenders, special servicers, banks, and private lenders in enforcing
distressed commercial loans, conducting sales via the Uniform Commercial Code, fraudulent
transfer actions, and through every stage of insolvency proceedings. In addition to his experience
in Single Asset Real Estate bankruptcy cases, Jason has represented agent banks and majority
lenders for syndicated loans, in out-of-court workouts, and both contested and consensual court
supervised restructurings. Jason has represented large international corporations, insurance
companies, financial institutions, and individual businesses in the federal and state courts in New
York. He has substantial experience representing litigants involved in:
Commercial foreclosure actions
Chapter 11 bankruptcy proceedings
Commercial litigation including, real estate, breach of contract, fraud claims
SEC enforcement actions and AML investigations
Financial institution litigation
MembershipsWall Street Block Chain Alliance, Advisory Board
American Bankruptcy Institute
New York Institute of Credit
Association for the Bar of the City of New York
Key MattersObtained accelerated payment in full on a judgment of foreclosure and sale in a contested
bankruptcy process involving multiple potential bidders.
-
Assisted a client in the purchase of an economic interest in a defaulted loan without slowing
down the foreclosure.
Assisted a client in negotiating the purchase of an economic interest in a hotel with
substantial value on the eve of a foreclosure sale and in a manner that did not require
additional motion practice to identify the new purchaser while also avoiding potentially
significant delay.
Obtained a preliminary injunction and six-figure settlement of fraudulent transfer action
seeking to unwind sale of significant real estate.
Obtained a preliminary injunction enjoining judgment debtor and transferee from further
encumbering real property that was the subject of a fraudulent transfer action. Negotiated a
six-figure settlement of this unsecured claim based on a foreign judgment.
IntelligenceHow to Survive an SEC Investigation or Enforcement Action
March 17, 2020
BitBlog Bi-Weekly Update
Co-author, Polsinelli BitBlog
March 4, 2020
Under Siege - Zen Master Steven Seagal Loses to the SEC
Co-Author, Polsinelli BitBlog
February 27, 2020
Digital Assets: What to Do When the SEC Comes Calling
Quoted, Crowdfund Insider
January 26, 2020
Wind of Change - The Year FinTech Came in From the Cold Polsinelli BitBlog: Year End Edition
Co-Author, Polsinelli BitBlog
January 2, 2020
BitBlog Weekly Summary
Co-Author, Polsinelli BitBlog
September 6, 2019
BitBlog Weekly Summary: Kik Kicks Back and the SEC continues its enforcement campaignagainst ICOs
Co-Author, Polsinelli BitBlog
August 16, 2019
Blockchain in 2019: Bankruptcy and Beyond
Speaker, American Bankruptcy Institute – 13th Annual Credit & Bankruptcy Symposium, Uncasville, CT
May 3, 2019
Future NOW
Speaker, Trigild Spring Conference 2019, Dallas, TX
April 18, 2019
On Being Open and Honest With Regulators: The Gladius Network Cease & Desist Order andthe SEC’s Map for ICO Remediation
Author, Crowdfund Insider
March 24, 2019
Heard at Tel Aviv Fintech Week
Quoted, Crowdfund Insider
March 10, 2019
-
Are STOs (Security Token Offering) the new ICOs (Initial Coin Offerings)...and all the Hype!
Panelist, FinTech Week Tel Aviv
March 4, 2019
Will Crypto ICO Creators Get Any Do-Over Second Chance Mulligan With The SEC ForCompliance?
Contributor, Bitcoin Exchange Guide
February 21, 2019
The SEC's "Get Out of Jail Free Card" (Kind Of)
Quoted, Forbes
February 20, 2019
Polsinelli Shareholder Jason A. Nagi to Host BitAngels Round Table
November 29, 2018
Polsinelli Shareholder Jason A. Nagi to Moderate at Block FS
Moderator
November 29, 2018
Digital Assets and the Long-Arm of the Law
Author, Polsinelli BitBlog
November 9, 2018
Guest Post: The First Federal Court Hearing on SEC Jurisdiction over ICOs
The D&O Diary
Featured in The D&O Diary
May 10, 2018
Ruling On What Isn't A Security Needed For ICO Clarity
Law360
May 9, 2018
Blockchain, Bitcoin & Cryptocurrency: Regulation, Enforcement & Litigation
Panel Speaker
New York City Bar
6th Annual Securities Litigation & Enforcement Institute
March 14, 2018
Blockchain: Coming to a CMBS Near You
March 12, 2018
Polsinelli Shareholder Jason Nagi to present at FinTech Week Tel Aviv
Co-Presenter, FinTech Week Tel Aviv
March 5, 2018
The Dark Side of Crypto - Fraud in Blockchain Crowd Sales and Beyond
New York White Collar Crime Tech
Speaker
March 1, 2018
Outcomes in Single Asset Real Estate Chapter 11 Cases
Journal of Bankruptcy Law
February/March 2018
Polsinelli Shareholder Jason A. Nagi to Present at FinTech World Workshop Series
February 7, 2018
-
Feds start to crack down on fraud as Bitcoin soars
CNN Tech
December 9, 2017
The Future of Blockchain Adoption and Digital Asset Regulation at Blockchain for Wall Street
Featured in investFeed Edge article
November 20, 2017
Legal and Regulatory Considerations for Blockchain Apps, Cryptoassets and ICOs
Blockchain for Wall Street Conference; New York City
November 14, 2017
Are ICOs risky business? Wild West of Finance; Wall Street Blockchain; Functionality;Integration and Security
Moderator, The Rise of Blockchain Digital Money 2017 - FinTech World Workshop Series; Washington, D.C.
November 6, 2017
U.S. Regulators Enter the FinTech Sandbox
July 2017
Regulatory Landscape of Digital Money
Moderator, The State of Digital Money; Los Angeles, CA
July 22, 2017
Special Report Reveals Outcomes in Single Asset Real Estate Chapter 11 Cases
June 2017
A Remedy for Lost Notes
June 23,. 2016
Make-Whole and No-Call Provisions - Caveat Lender
Business Workouts Manual, 2015-2016 Edition
2015-2016
Workout Litigation- What a General Counsel Needs to Know, Session Chair
Real Estate General Counsel Forum
December 2012
Examining the Foreclosure & Bankruptcy Process, Session Chair
The Bankers Forum on Distressed Properties & Real Estate Loan Workouts
April 2010
Secured Creditors Are Not Entitled to Credit-Bid in a Sale Through a Reorganization Plan
ABI Asset Sales Committee Newsletter, Volume 7, Number 2
March 2010
Section 365 of the Bankruptcy Code: When the Words Get in the Way
105 Com. L.J. 413 (2001)
2001
Upcoming EventsWebinar: How to Survive an SEC Investigation or Enforcement Action
Tuesday, March 17
-
real people.
Areas of Focus
Financial Regulatory Enforcement
Financial and Securities Litigation
Government Investigations
Internal Investigations
Corporate Directors & Officers Liability
Litigation
Class Action and Multidistrict Litigation
Commercial Litigation
Litigation and Dispute Resolution
Financial Technology (FinTech) and
Regulation
Education
J.D., University of Connecticut School of
Law
B.S., St. Joseph's University, Pa.
Bar Jurisdictions
Arizona
Connecticut
Court Admissions
U.S. District Court, District of Connecticut
U.S. Court of Appeals, Second Circuit
U.S. District Court, District of Arizona
U.S. Court of Appeals, Ninth Circuit
U.S. District Court, District of Colorado
United States Supreme Court
real perspective.SM
Paul J. Roshka, [email protected]
OverviewKnown for his thorough preparation and persistence, Paul Roshka has a national practice
representing companies, their directors, officers, and employees during investigations and
enforcement/disciplinary proceedings involving potential violations of the federal and state
securities laws, and other financial regulatory statutes and rules. He has handled matters initiated
by virtually every SEC Regional Office and FINRA District Office, and their Home Offices in
Washington, D.C.
He is also a recognized bet-the-company litigator. Paul has defended securities/financial claims in
federal and state court, including class action defense. He is a seasoned litigator trusted to resolve
our clients’ disputes. Paul and the lawyers he supervises know it is important to keep clients
informed, and provide value for the services they render. He handles arbitrations and mediations
nationwide. He is also a AAA arbitrator and serves as a mediator is cases involving claims of
securities violations and complex issues in the real estate, insurance, mortgage and banking
industries.
Paul’s passion for resolving complex disputes is equally matched by his passion for positively
impacting his community. He has spearheaded numerous significant charitable efforts that have
directly and positively impacted the lives of thousands of Arizona children and families. During
Paul’s three year term as Chairman of Phoenix Children’s Hospital’s Board of Directors, he led the
effort to move the young Hospital from two floors of an existing health care provider to its own
free-standing campus. Working with bond counsel and underwriters for the offering, and as a
member of the Capital Campaign Committee, Paul helped the Hospital raise the funds to
purchase and renovate an existing hospital on 26 acres in central Phoenix. Today Phoenix
Children’s Hospital has six Centers of Excellence, nearly 1000 specialists, and provides outpatient,
trauma, and emergency care across more than 75 subspecialties. Children and their families no
longer have to travel to hospitals in other states to receive world class health care.
Paul reorganized Phoenix Children’s Hospital’s Foundation’s Board of Directors and served six
terms as the Foundation’s Chair. He has chaired Phoenix Suns Charities, the Children’s Cancer
Center, the Phoenix Zoo’s Wildest Club in Town, and the Wildest Ball in Town. Paul has been on
the Boards of the Salvation Army, Xavier College Preparatory School, and Southwest Human
Development which is the Arizona Easter Seals affiliate and an organization that seeks through its
40 programs to create a positive future for every child.
He received KPNX TV’s 12 Who Care Hon Kachina Award and the Jefferson Award from the
American Institute for Public Service for his commitment to the Children’s Cancer Center at
Phoenix Children’s Hospital.
Distinctions
-
Recognized by The Best Lawyers in America as the 2016 SEC Defense "Lawyer of the Year"
in Phoenix, Arizona
Recognized by The Best Lawyers in America as the 2013 Securities Litigation "Lawyer of
the Year" in Phoenix, Arizona
Selected for inclusion in The Best Lawyers in America in the fields of:
Bet-the-Company Litigation, 2003-2020
Commercial Litigation, 2003-2020
Litigation - Regulatory Enforcement (SEC, Telecom, Energy), 2003-2020
Litigation - Securities, 2003-2020
Arizona's Finest Lawyers: Business Litigation, 2006-2020
Selected by Arizona Business magazine as a Leader in Law – Securities & Finance, 2018
AV Preeminent Rating, Martindale-Hubbell
Selected for inclusion in Super Lawyers Top 50 Lawyers in Arizona, 2012-2014
Selected for inclusion in Super Lawyers, Securities Litigation, Business Litigation, 2007-2020
Selected by AZ Business magazine as one of Arizona's Top 100 Lawyers, 2015, 2016
AZ Business magazine's Top Lawyers, ADR, 2014
Arizona State University
Served as an Adjunct Professor at Arizona State University teaching courses on White
Collar Crime, Organized Crime, and Corporate Crime
MembershipsState Bar of Arizona
Alternative Dispute Resolution Section
Securities Regulation and Trial Practice Section
State Bar of Connecticut
American Bar Association
Business Law Section
Law Practice Management Section
Litigation and Health Law Section
Maricopa County Bar Association
Securities Industry and Financial Markets Association (SIFMA)
Compliance and Legal Society
Arizona Chamber of Commerce and Industry
Legal, Regulatory and Financial Services Committee
Key MattersRepresented the board of directors of a religious-based affinity foundation. The
representation involved resolving the regulatory concerns of the SEC, the Arizona
Corporation Commission (ACC) and other State securities regulators while working with the
foundation’s board to preserve funds invested in this $560 million Ponzi scheme.
Represented the former president of a mortgage banker and its affiliated securities arm during
a joint SEC and ACC investigation regarding the entity’s sale of over $500 million in
investments.
Defended the former CFO of a public company during an internal corporate investigation, the
SEC investigation and the enforcement action filed against our client alleging accounting
irregularities to inflate financial results and overstate net income in violation of the antifraud
provision of the Securities Act and the antifraud and books and records provisions of the
Exchange Act.
Defended the president of an international firm in an investigation and enforcement
proceeding brought by the ACC involving allegations concerning unregistered securities and
®
®
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securities fraud arising out of the sale in Arizona of approximately $25 million of universal
leases relating to interests in Cancun hotels.
Defended an investment adviser in an SEC investigation and proceeding alleging
misrepresentation of investment risks and failing to disclose a side compensation agreement
involving a $10 million investment pool in violation of the Securities Act, the Exchange Act
and the Advisers Act.
Represented a former vice president of investor relations for a public company during an SEC
investigation involving concerns of insider trading.
Represented the former president of a trust company during an investigation conducted by
the SEC and the New York Attorney General’s Office involving allegations of late trading of
mutual funds.
Represented numerous firms and registered representatives in investigations and proceedings
brought by FINRA charging violations of its rules concerning suitability, supervisory
deficiencies, unauthorized transactions, misrepresentations and conduct inconsistent with just
and equitable principles of trade.
Obtained dismissal with prejudice in a securities fraud complaint filed in the United States
District Court in Arizona against a former CEO brought by 117 plaintiffs who invested more
than $20 million.
Defended a securities fraud class action and a derivative lawsuit filed in the United States
District Court in Arizona that named Chief Financial Officer of public auto-parts company.
Defended numerous broker-dealers and registered representatives in a FINRA arbitrations in
Arizona, California, Florida, Washington, Minnesota, Utah, Missouri and Texas alleging
misrepresentations, unauthorized transactions, unsuitable recommendations and churning.
Represented an investment advisory firm and one of its principals during an SEC
investigation into the firm’s options trading strategy, and in defense of two arbitrations filed by
a combined total of 30 clients seeking $12 million in damages. The SEC did not file charges.
The claims against our clients settled for approximately $125,000.
Participated with other Polsinelli lawyers in the representation of an insurance agency and
five of its agents during investigations conducted by the SEC and the Arizona Securities
Division, and the proceedings these agencies filed against our clients for their alleged role in
placing $17 million of notes issued by a $1.2 billion Ponzi scheme.
Represented an individual who invested $1.1 million in a business touting the harvesting of
spiny lobsters for sale in China. The accounting records showed the money was used for the
promoters’ personal expenses including the lease of two Mercedes Benz and a Range Rover.
The two LLCs and three individuals behind the scheme settled the case favorably for our
client.
Participated with other Polsinelli lawyers in the representation of an investment adviser who
was forced to leave his firm by his partner. The AAA arbitration resulted in an award in favor
of our client in excess of the $1 million sought for the buyout of his partnership interest,
pre-judgment interest, post-judgment interest, and attorney’s fees and costs.
As part of the team of Polsinelli lawyers who have a FinTech practice, represent companies,
their principals, and employees in the crypto currency industry during investigations by the
SEC and the CFTC.
Represented a registered representative in a FINRA arbitration against allegations of fraud,
misrepresentations and non-disclosures, elder abuse, breach of fiduciary duty, and suitability.
The claims were denied in their entirety. After the hearing regarding expungement of the
claims from the representative’s BrokerCheck and CRD, the arbitrator found the allegations
were false and granted the request for their expungement.
IntelligenceHow to Survive an SEC Investigation or Enforcement Action
March 17, 2020
Under Siege - Zen Master Steven Seagal Loses to the SEC
Co-Author, Polsinelli BitBlog
February 27, 2020
Prosecutors Not Required to Prove Tipper Received “Personal Benefit” to be Convicted UnderCriminal Insider Trading Statute
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January 2020
SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval
Co-Author, Polsinelli BitBlog
October 11, 2018
Court Denies Defendants' Motion to Dismiss in Commodity Fraud Case Involving the VirtualCurrency My Big Coin
Co-Author, Polsinelli BitBlog
October 11, 2018
M&A Litigation Series: Stockholder Claims
March 22, 2016
CLE Presentations
Navigating the Credit Crisis: What Every Litigator and Corporate Counsel Needs to Know About Representing
Clients in an Uncertain World, Arizona State Bar
Best Practices in Securities Arbitrations and Enforcement Priorities at the Securities and Exchange
Commission, Arizona State Bar
The Mechanics and Pitfalls of Representing Businesses and Individuals Before Administrative Agencies,
Arizona State Bar
Conducting Internal Investigations: How to Identify and Prevent Corporate Liability, Arizona State Bar
Civil RICO, Maricopa County Bar Association
Dealing With The Regulators – SEC, NASD and the State, Arizona State Bar
Anatomy of a State Enforcement Action, Arizona State Bar
Securities Fraud: Protecting the Rights of the Victim, Defending the Rights of the Accused, Maricopa County
Bar Association
Recent Developments in Securities Litigation, Arbitration and Enforcement, Arizona State Bar
Mediation Seminar, joint State Bar and NASD Regulation, Inc.
The Bulls, the Bears and the Sidewinders, Arizona State Bar
Administrative & Criminal Prosecution of Securities Fraud Cases, Maricopa County Bar Association
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Upcoming EventsWebinar: How to Survive an SEC Investigation or Enforcement Action
Tuesday, March 17