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Cady Bar the Door Insight & Commentary on SEC Enforcement Actions and Related Issues

Category Archives: Microcap Fraud

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Foreign Pink Sheets Companies and the FCPA

Posted in FCPA, Microcap Fraud

Penny stock companies have been much in the news recently.  They can be tough entities for law enforcement to look into given that their officers and directors are often not inclined to cooperate with government investigations.  They can also be full of criminal activity.  At the same time, Foreign Corrupt Practices Act enforcement is often… Continue Reading

SEC Puts Some Color on Its New Admissions Policy

Posted in Hedge Funds, Microcap Fraud, SEC Litigation

Earlier this summer, SEC chair Mary Jo White told a Wall Street Journal conference that the Commission would in some circumstances depart from its longstanding policy of allowing defendants to settle cases without admitting or denying wrongdoing.  She didn’t let Labor Day hit before putting the new plan into action. You may remember that the… Continue Reading

SEC Sues Auditor for Failing to Audit

Posted in Accounting Fraud, Auditors, Financial Fraud, Microcap Fraud, Non-scienter-based Violations

This world has a lot of problems that require fixing, but I dare say that scratch-off lottery tickets is not one of them.  Still, that is the problem that Lee Cole and Linden Boyne ventured to solve through Electronic Game Card, Inc. (EGMI), a company that tried to develop credit card-sized electronic games that could… Continue Reading

SEC Going after Lawyers

Posted in Microcap Fraud

Over the last year, SEC Enforcement Director Rob Khuzami has made no secret of his disdain for defense counsel who engage in “questionable tactics” to gain advantage for their clients involved in SEC investigations.  He made a speech last June in which he cited a number of examples of those tactics.  They included: Multiple representations of… Continue Reading

Oh, Rudy . . .

Posted in Microcap Fraud

I’ve said it once already:  If you used to be famous, you probably should steer well clear of conduct that could be construed as securities fraud.  Because of the perceived deterrent value in highlighting your violations, regulators will have extra incentive to catch and make an example out of you.  Daniel “Rudy” Ruettinger, a former Notre… Continue Reading

SEC (Smartly) Focuses on Transfer Agents

Posted in Microcap Fraud, Non-scienter-based Violations

Enforcement investigations into microcap, or penny, stocks are difficult and often thankless.  They frequently involve unsavory characters who could as easily be running a real estate scam or Nigerian advance fee fraud as one involving securities.  Proving intent to defraud in cases like this is often very tough, as the players shield their activities behind… Continue Reading