Kristina Subbotina of Ross Law Group reviews the SEC’s recent action against the wind turbine company and individuals
The SEC filed a complaint against Thunderbird Power Corp., a wind turbine company (the “Company”) and its three affiliated individuals (together with the Company, the “Defendants”), Thunderbird’s CEO Richard Hinds, former Thunderbird president Anthony Goldstein, and consultant John Alexander “Lex” van Arem. The SEC alleged that the Defendants defrauded investors in a US $1.9 million unregistered offer and sale of the Company’s stock.
Specifically, the SEC stated that the Defendants made false and misleading statements through the Company’s press releases, marketing materials, offering materials, and a YouTube video. For example, the press releases and the YouTube video mislead investors by stating that Siemens had tested the Company’s wind turbine product and confirmed its efficiency and production ability. The SEC alleged that the Company’s offering memorandum contained material misrepresentations and omissions about the Company’s operations, including how the Company would use investor proceeds.
Additionally, all the Defendants allegedly misappropriated 40% of the investor funds to enrich themselves and to compensate sales agents.
Private companies raising funds in private offerings, and its officers and even consultants. Investors should also be aware of the continued existence of fraudulent investment schemes.
This enforcement action brings attention to the continued existence of fraudulent investment schemes, and the very real risk of illegal offerings being conducted at present. It should heighten both regulatory and investor awareness of the prevalence of this issue.
Also, the SEC continues its efforts to discourage issuers from defrauding investors and demonstrates that even relatively small offerings (under $2 million) are under its purview.
In general, the SEC’s complaint serves as a reminder to private companies to comply with the U.S. securities laws and regulations when offering and selling securities, specifically:
Compliance teams should make sure that their company’s employees and consultants, including sales representatives, communicate to investors only information consistent with the offering materials. A compliance team, for example, may want to review emails and phone communications between the sales representatives and investors to ensure the former do not mislead the latter.
Management teams or boards of directors can be reminded to continue directing strong efforts to ensure compliance with the U.S. federal and states securities laws and regulations:
Service providers should remind their clients (i) to provide the complete and correct information in the offering and marketing materials, and (ii) to properly qualify for an exemption from the registration requirements.
Kristina Subbotina is a corporate and securities attorney with Ross Law Group PLLC representing investment funds and emerging growth companies throughout their lifecycle, including formation, financing rounds, and exit strategies.
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How can firms manage unknown risks as compliance regulations evolve and financial crimes grow more sophisticated?
M&A transactions inevitably pose some level of risk between buyers and sellers. More often than not, M&A transactions are time-sensitive with significant pressure from all sides.
This can often lead to corners being cut during financial crime, money laundering, and terrorist financing due diligence. However, regulatory actions, shareholder lawsuits, and criminal charges can overshadow a deal even years after it has been closed.
Financial crime units and law enforcement have increased their focus on M&A in private capital markets transactions as vehicles for money laundering and financing terrorism. This has raised the bar and heightened regulatory expectations of what is required by all parties involved in a transaction.
Join “Unknown Risks in M&A — AML Screening and Due Diligence in Corporate Finance” session featuring AML and due diligence experts from the M&A industry. In this session, we will cover:
We invite you to join us for this Fireside Chat on August 13 featuring an exciting lineup of panelists to learn more about the unknown risks in AML and due diligence for corporate finance M&A transactions.
Panelists:
Moderated by: Andrew Weiner, Head of Sales at iComply
About iComply
iComply Investor Services Inc. (“iComply”) is a Regtech company that provides fully-digital KYC and AML compliance solutions for non-face-to-face financial and legal interactions. iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience. By partnering with multinational technology vendors such as Microsoft, DocuSign, Thomson Reuters and Refinitiv, iComply is bringing compliance teams into the digital age. Learn more: www.icomplyis.com
Biometric ID Verification for Small Businesses: A Practical Guide.
Enhance security and streamline operations with biometric ID verification. Learn how to choose the right technology, prioritize privacy, and integrate it seamlessly into your small business.
Customer Due Diligence (CDD) is a crucial process in client and corporate onboarding. It helps businesses verify the identity of their customers, assess potential risks, and comply with regulatory requirements. What is CDD? CDD involves collecting and verifying...
Vancouver, B.C. – July 28, 2020 – iComply Investor Services (“iComply”), a leading regtech software provider, is pleased to announce its listing in the Financial Industry Regulatory Authority (FINRA) Compliance Vendor Directory, which features vendors offering products, solutions, and services to firms overseen by the US regulator.
“iComply is dedicated to making the financial markets more robust, secure, and efficient,” said Matthew Unger, CEO and Founder of iComply Investor Services. “This listing in the FINRA Compliance Vendor Directory is an exciting moment in the company’s history as we continue to expand our client base and work with US firms to digitize their back office.”
iComply’s compliance management solutions offer institutional-grade identification and risk mitigation tools that support the complete AML compliance lifecycle for clients in industries ranging from professional services to online banking, capital markets, payment processing, trading platforms, virtual assets, as well as government and enterprise.
FINRA is an independent, government-authorized, not-for-profit organization that oversees U.S. broker-dealers. FINRA works under the supervision of the Securities and Exchange Commission (SEC) and writes and enforces rules, examines firms for compliance, fosters market transparency, and educates investors.
The Compliance Vendor Directory features companies specializing in: compliance consulting, cybersecurity, data management, information archiving, exam prep & firm CE, insurance brokers, monitoring & surveillance, PCAOB registered accountants, and registration services.
About iComply Investor Services Inc.
iComply Investor Services Inc. (“iComply”) is a Regtech company that provides fully-digital KYC and AML compliance solutions for non-face-to-face financial and legal interactions. iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience. By partnering with multinational technology vendors such as Microsoft, DocuSign, Thomson Reuters, and Refinitiv, iComply is bringing compliance teams into the digital age. Learn more: www.icomplyis.com
Biometric ID Verification for Small Businesses: A Practical Guide.
Enhance security and streamline operations with biometric ID verification. Learn how to choose the right technology, prioritize privacy, and integrate it seamlessly into your small business.
Customer Due Diligence (CDD) is a crucial process in client and corporate onboarding. It helps businesses verify the identity of their customers, assess potential risks, and comply with regulatory requirements. What is CDD? CDD involves collecting and verifying...
The history of DAOs is a short but interesting one. While the very first DAO was officially launched in 2014, the most famous example–The DAO–launched on the Ethereum blockchain in 2016 and raised more than USD $150M over a period of several weeks. Unfortunately, The DAO was exploited by a hacker and was drained of over $70M. Ultimately, the hack resulted in a hard fork of the Ethereum blockchain, returning the funds to the project’s creators.
While DAOs have marked a place in blockchain history, they are often misunderstood. Firstly, the term “DAO” means different things to different people and secondly, many open-ended questions typically come up in conversations about DAOs:
In a short period of time, the virtual asset marketplace has already gone through several waves of innovation—from initial coin offerings to security token offerings and decentralized finance.
Many experts and industry leaders have touted DAOs as the next major application of blockchain technology that will support virtual assets in the years to come.
Join us for our latest live fireside chat “DAOs and Decentralized Governance: How Autonomous Organizations are Transforming Virtual Assets” along with industry experts and thought leaders to discuss:
We invite you to join us for this Fireside Chat on July 30th featuring an exciting lineup of panelists to learn more about DAOs and the role of decentralized governance.
About iComply
iComply Investor Services Inc. (“iComply”) is a Regtech company that provides fully-digital KYC and AML compliance solutions for non-face-to-face financial and legal interactions. iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience. By partnering with multinational technology vendors such as Microsoft, DocuSign, Thomson Reuters and Refinitiv, iComply is bringing compliance teams into the digital age. Learn more: www.icomplyis.com
Biometric ID Verification for Small Businesses: A Practical Guide.
Enhance security and streamline operations with biometric ID verification. Learn how to choose the right technology, prioritize privacy, and integrate it seamlessly into your small business.
Customer Due Diligence (CDD) is a crucial process in client and corporate onboarding. It helps businesses verify the identity of their customers, assess potential risks, and comply with regulatory requirements. What is CDD? CDD involves collecting and verifying...
Leaked report highlights FBI’s growing attention towards private sector AML risks with advice for corporations to ensure proper due diligence
July 14, 2020: The $10-trillion private equity market in the U.S. is facing additional scrutiny as a vehicle for money laundering, according to the intelligence bulletin reported having been leaked from the FBI.
The document suggests that private investment funds lack adequate anti-money laundering programs and calls on regulators to enhance their screening efforts of the industry.
Private capital markets firms, investment funds, and equity firms, as well as their law firms and due diligence providers.
As the power and size of private capital markets increased, experts are expecting regulators to pay closer attention to corporate mergers and acquisitions transactions, angel investments, and private equity markets.
While no public action has been taken by regulators, private capital markets continue to operate with little-to-no KYC friction. The leaked FBI document demonstrates the growing trend among law enforcement agencies and financial regulators to set new standards of AML compliance for all verticals of private capital markets.
Is your AML compliance too expensive, time-consuming, or ineffective?
iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.
Request a demo today.
Biometric ID Verification for Small Businesses: A Practical Guide.
Enhance security and streamline operations with biometric ID verification. Learn how to choose the right technology, prioritize privacy, and integrate it seamlessly into your small business.
Customer Due Diligence (CDD) is a crucial process in client and corporate onboarding. It helps businesses verify the identity of their customers, assess potential risks, and comply with regulatory requirements. What is CDD? CDD involves collecting and verifying...
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