A membership interest in a limited liability company is a “security” as broadly defined under the Missouri Securities Act of 2003.[1] Now the Missouri Commissioner of Securities, through its Enforcement Section of the Securities Division (“Enforcement Section”), is sending letters to specified companies that have newly filed with the Missouri Secretary of State as limited liability companies or as foreign companies, which state it has received information of participation in prohibited conduct by these companies.
Section 409.6-602(b) of the Missouri Revised Statutes[2] provides the Enforcement Section with extremely wide latitude to compel the production of written statements and documents regarding any matter that it considers relevant or material to its investigation. Some of these letters require the compulsory production of documents and written responses:
·
In narrative form detailing the objectives
of the limited liability companies;
·
Listing all individuals/entities with
investments in the limited liability companies to include names, addresses,
telephone numbers, email addresses, and dates and amounts investments;
·
Name and address of all financial
institutions where investors’ money was/were deposited; and
·
In narrative form detailing how the
investors’ funds are/were used.
In seeking claims of exemption from registration or exception in these letters, the Enforcement Section seems to have assumed that these new limited liability companies are operating in Missouri as an unregistered investment adviser, broker-dealer, investment adviser representative, or broker-dealer agent, whether operating as an investment company or not. Consequently, these letters should be taken extremely seriously because the costs of defending against Enforcement Section enforcement proceedings that assert these assumptions can be extreme, whether warranted or not.
If you receive one of
these letters, you may not want to act alone and wish to consult with one of
the experienced attorneys at Cosgrove Law Group, LLC. Call us at 314-563-2490.
Author: Brian St. James
No comments:
Post a Comment