Disclaimer and Warning

Disclaimer and Warning – Please Read This One_____________________________

We offer the analysis of 17(b) cases given below. This comes with several important disclaimers and warnings.

First, this is not legal advice to you or anyone else. Unless you retain me to advise you specifically for specific matters, you are on your own. Seek qualified counsel.

Note also that various courts and various regulators, even individual regulators in any one regulatory agency, have different opinions about the rules. This means that even if there was one decision or allegation in a case discussed, these matters are not final and may change.

Further, the rules and their interpretation are constantly evolving. One of the tricky things in securities regulation is that what was normal today may be outside the rules tomorrow. You rely on any opinion or ruling at your own risk.

Even having a legal opinion to protect you may not be enough, if in the opinion of the regulator the opinion is wrong. In this regard, I give you the case of SEC v. Wyly, where the Wylys were armed with expensive legal opinions and advice but their defense that they acted in good faith by seeking and following legal advice failed them. Make sure the advice is clear, that your advisors are made fully aware of all of the facts and circumstances, and you document and clearly follow the advice. Then, assuming the legal advice is made in good faith and not part of a conspiracy to evade the law, you should prevail. However, prevailing after the emotional and financial stress of a lengthy and public case is less than the best situation to be in. It is better to avoid problems altogether. Document everything and keep backups of the documents in separate and secure locations.

In our discussion of these cases, we consider here that the allegations of the SEC were eventually proven to be correct. Please note that in these cases, actually these are mere allegations, and the persons mentioned are not guilty of any violations unless they were proven to be so. We simply take the allegations as though they were proven because we are not even interested in being charged with anything wrong, so we avoid those things that the regulators consider to be improper.

Violations______________________________________________________________

In my experience there are two types of violations. First, you have the person who means well but ignores the rules out of ignorance, negligence or carelessness. Second, you have the bad actor who is getting even with investors for not handing over all their money before. These people often make it seem as though they want to break as many rules at they can. Please note that the careless are prosecuted as are the bad actors. However, the ferocity of the prosecution is naturally worse for the bad actors. It is your duty to find out about and abide by the rules. As they say, ignorance is no excuse.