Valenti Hanley PLLC

Avert problems with the Securities and Exchange Commission

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.

The SEC exists to protect investors, preserve the function and fairness of the securities market and facilitate the formation of capital. It's always wise to understand what can draw the interest of the SEC -- and how you can avoid doing so.

While financial transparency toward investors is important, you also have to constantly be alert to issues like:

  • A failure to disclose important information to investors about any licensing compliance issues or violations your company may have
  • Not providing employees with the necessary risk disclosures and financial information to understand their stock option benefits
  • Misleading investors about your product in any way or its market viability
  • Not having the appropriate risk disclosure language in your securities offerings
  • Failing to properly register your securities or failing to register as a broker or agent selling securities

The laws surrounding securities and other financial compliance issues are increasingly complex. Wise business owners know that the best way to avoid problems is to be proactive. Our office can help you better understand your legal obligations, avoid financial penalties and protect your business from unnecessary injunctions.

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