An article on U-5 Defamation: http://www.sfmslaw.com/Securities-Regulation-Corporate-Governance/U-5-Defamation.shtml
“The Supreme Court in an Interdependent World”
(The Wall Street Journal, 9.15.15; A7)
The Supreme Court Goes Global:
“Legal problems – human rights violations, threats to national security, computer hacking, environmental degradation, corporate fraud, copy-right infringement – surface beyond our borders and may become potential threats to us at home...the frequent presence of foreign-related issues in the court's cases has little or nothing to do with the current political debate about whether American courts, including the Supreme Court, should refer in their opinions to decisions of foreign courts. Judicial reference to foreign law and practices do not reflect the ideologies of justices – rather they reflect a world in which cross-boundary travel, marriage, commerce, crime, security needs and environmental impacts have become prevalent.”
- Supreme Court Justice Stephen Breyer
A Texas attorney was sentenced to 35 months in prison and the surrender of his law license for misleading investors with artificially inflated stock prices of a sham company advertised to be on the verge of launch.
Martin Cantu and his partner Jason Wynn allegedly engaged in a $3 million conspiracy, netting about $550,000 and $2.5 million, respectively. Cantu still faces an $800,000 penalty from the U.S. Securities and Exchange Commission. [i]
Cantu pled guilty to conspiracy, but was also found guilty of securities fraud for his role in the unregistered stock offering of a web-based company that was never in a position to fulfill its promises to investors. After selling 10 million shares for one penny each, Cantu received 300,000 shares at no cost, just prior to a publicity campaign that included advertising in the USA Today newspaper.[ii]
Three million mailers were also distributed touting the company’s imminent launch, with promises of near limitless returns on the investment. In addition to the increased demand resulting from this publicity, the co-conspirators utilized brokerage accounts to buy shares and create the illusion of demand, while maintaining an inflated higher share price.[iii]
After accepting a plea deal, Wynn was sentenced to five years of probation and $425,000 in restitution. This does not include the $11 million SEC penalty he faces.[iv] Generally speaking, attorneys should never get personally involved with unregistered offerings.
[i] Orzeck, K. (2015, December 15) Texas Atty Gets 3 Yrs. For Duping Investors in $3M Web Scam [electronic format]. Retrieved from http://www.law360.com/articles/738329