Crowdcheck Blog
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When do companies need to tell investors about criminal proceedings that allege their officers and directors have engaged in fraud? According to some state regulators, it may be sooner than companies expect.
In a recent settlement, an issuer was found liable for failing to disclose in its Reg A offering the ongoing criminal proceeding involving allegations of fraudulent behavior against their CEO even though there had not been a conviction. Further, the criminal proceedings at issue were outside the United States.
The Form 1-A, which sets forth the SEC’s disclosure requirements for Reg A offerings, requires disclosure of any legal proceeding material to…
This entry is filed under Bad Actor, Federal Law, Regulation A, State Law
The Theranos jury’s fraud convictions of Elizabeth Holmes, former CEO and founder of the now defunct Theranos, Inc., should give pause to startups seeking to build their reputation by touting their relationships with other companies. In the press to find financing, it can be tempting to use the logos of other companies, especially those that command market attention, to persuade investors to come on board. In the case of Theranos, Ms. Holmes placed the logos of Pfizer and Schering-Plough on Theranos reports without receiving permission from those companies. In her testimony, Ms. Holmes stated that she did not mean to deceive investors or business partners. …
This entry is filed under Fraud, Securities Law