Legal Issues Blog

What to do when your business partner wants to leave

On behalf of Valenti Hanley PLLC on Sunday, November 17, 2019.

Forming a business as a partnership is one of the simplest ways to get a business off the ground, but this simplicity can lead to complications later on if partners do not take the time necessary to form the enterprise properly. One of the most common complications business partners face is dissolving the business relationship fairly, especially if there is no written agreement outlining how to do so.

Partnerships end for a variety of reasons, and here is where the straightforward nature of a partnership can get tricky to navigate. In partnerships, each partner receives an equal share of profits and also shoulders an equal share of debts and other liabilities, unless a written agreement outlines some other sharing structure.

We can help you legally make money

On behalf of Valenti Hanley PLLC posted in regulatory work on Wednesday, November 13, 2019.

Are you sitting on a goldmine of an idea regarding a business development or a natural gas harvest? Even the best ideas usually need a large influx of cash to bring them to fruition.

But you might have that bridge crossed as well. Let's say that you have secured the capital you need to develop your concept through a private placement transaction.

Did a plan manager violate their duty to you and lose your money?

On behalf of Valenti Hanley PLLC posted in representing investors on Friday, November 8, 2019.

As an investor, you put a lot of faith in the individuals who manage your money on your behalf. You trust that their expertise will leave them to make decisions that will increase your wealth, not endanger it.

Investment fund managers and other financial professionals have a fiduciary duty to their clients to act in the best interest of the individuals who invest in their fund or go through their service. Unfortunately, some financial professionals may violate their fiduciary duty to clients by putting their own profit first or acting in a way that can only be described as grossly negligent.

The dangers of disclosing a financial investigation to investors

On behalf of Valenti Hanley PLLC posted in securities law and litigation on Wednesday, October 30, 2019.

If your company is under investigation by the Securities and Exchange Commission (SEC) for financial fraud, should you notify your investors? Some companies believe that transparency is important, so they disclose these investigations.

Another common reason for disclosure is that companies believe that they're legally required to do so. Companies are required to disclose a "necessarily material event." However, they have some discretion in whether to consider an SEC investigation is one of these events.

Could the Sarbanes-Oxley Act trip you up?

On behalf of Valenti Hanley PLLC posted in securities law and litigation on Friday, October 25, 2019.

Most Louisville residents have never heard of the Sarbanes-Oxley Act that was signed into law by President George W. Bush back in 2002. But this comprehensive federal law — it has 11 sections — could indeed adversely impact your life if you wind up on the wrong side of the law with the Securities and Exchange Commission (SEC).

Its provisions both expanded and established requirements for public accounting firms, managers and public company boards here in the United States. Companies that are held privately may also be affected by some provisions, e.g., willfully destroying evidence that impedes federal investigations.

Steps to take to avoid investment scams and fraud

On behalf of Valenti Hanley PLLC posted in representing investors on Friday, October 18, 2019.

You want to invest your money. You know it can be profitable and set you up for the future. You also know that you want to let professionals do this on your behalf, as a nod to their knowledge and experience.

At the same time, you worry about fraud and investment scams. You have heard too many stories of investors losing it all because they trusted the wrong person. What can you do to stay safe? A few steps you can take include:

Ignore unsolicited offers that come in. If you didn't contact someone first, the odds are higher that the offer is a scam. Yes, there are legitimate offers out there, but you should be the one to initiate it.
Always ask questions. Don't do anything with your money until you are satisfied with the answers you get.
Do your own research. Look into the offer and the person making it. Find out about their history. You don't need to be an expert in this financial arena to glean a general sense of what's going on and what they'll do with your money.
Understand that a lot of fraud starts online. The internet is a powerful tool, but it comes with risks.
Always ignore things that you feel are "too good to be true." For instance, someone who tells you that an investment has "no risk" is lying to you. There is always risk.

When securities laws are violated, investor lawsuits can help

On behalf of Valenti Hanley PLLC posted in representing investors on Wednesday, October 9, 2019.

As an investor in a company, you have a good reason to be interested in how that company conducts its business. When the leaders of a company behave incompetently or commit some form of misconduct that damages the value of the company (and your investment), a lawsuit may be an appropriate course of action.

Typically, an investor lawsuit will be filed as a Securities Class Action. One lawsuit will represent all of the investors who have suffered the same economic fallout that you have suffered. Some of the most well-known investor actions in recent history include:

A lawsuit against the Chipotle restaurant chain after an outbreak of food-borne illness that was caused, in part, by a change in business practices that hadn't been properly disclosed to investors
A lawsuit against Facebook (which is still pending) over a secret data-mining operation that was exposed in 2018
A lawsuit against car manufacturer Volkswagen over an emissions fraud incident that caused stock prices to plummet
A lawsuit against Enron due to acts of deliberate fraud by top executives who misstated the company's financial health in official reports
A lawsuit against Tyco after massive corporate fraud was exposed and an executive imprisoned, causing the company's stock to falter

Avert problems with the Securities and Exchange Commission

On behalf of Valenti Hanley PLLC posted in securities law and litigation on Wednesday, October 2, 2019.

It isn't easy running a startup organization in the tech industry these days -- and the Securities and Exchange Commission (SEC) isn't about to make it any easier.

The SEC has increasingly been focused on incidents of white collar crime and fraud in private companies. In April of this year, for example, the former chief executive officer (CEO) of a small, defunct mobile payment firm was charged with purposefully inflating his company's revenue reports in order to raise the company's stock. He then sold his own shares at the inflated value. Ultimately, he was forced into an agreement that required him to pay over $16.7 million to settle the issue without admitting guilt.

Avoid these 3 common partnership dispute causes

On behalf of Valenti Hanley PLLC on Saturday, September 28, 2019.

Setting up a business is tough. You have a lot to think about, and most people realize that it's hard to do it alone. That's why partnerships are so common in business. Co-founders, for example, may work together and have better access to capital for the creation of a business. It works out well when the partnership is good, but if it sours, there can be many problems.

There are a few common partnership dispute causes that you can avoid if you plan for them in advance. Most disputes are caused by misunderstandings and disagreements over basic principles that affect the business. Discussing those thoroughly can help prevent many of the disputes that are seen in business today.

Don't be afraid to question a broker or financial advisor

On behalf of Valenti Hanley PLLC posted in representing investors on Friday, September 27, 2019.

When your financial advisor tells you something, do you feel like you just have to accept it without question? After all, this person is an expert. You work with them specifically for their knowledge, knowing you don't have it. Should you ever question them?

Absolutely. This is your money. It's your investment. It's your future. Never be afraid to ask questions. If your advisor makes you feel like you cannot do so, it may be time to find someone else to help you with your money.