The Dangers of Using Unregistered Brokers and Finders

As I’ve written before on this blog, business owners need to be careful about hiring unregistered brokers and finders for capital raises. This rule applies to some M&A events as well. I was recently interviewed by The Ambulatory M&A Advisor, and the resulting article can be found here: http://www.ambulatoryadvisor.com/the-dangers-of-unregistered-brokers-and-finders/

While The Ambulatory M&A Advisor specializes in M&A for ambulatory care centers, the issues discussed apply to any business.

Enjoy!

Summary of the American Taxpayer Relief Act of 2012

On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which was passed by Congress on New Year’s Day. After almost a decade of uncertainty surrounding temporary tax legislation, the new law makes permanent many provisions of prior law which had previously been extended a year or two at a time, making tax and estate planning very difficult. Click here for a brief summary of the highlights.

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© 2013 Casey W. Riggs — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.

Neogenix Oncology: A Good Case Study on Securities Law (Non)Compliance by a High Growth Company – Part 3: When the Genie Can’t Be Put Back in the Bottle

In my previous posts, I described the events leading up to the Chapter 11 bankruptcy and supervised asset sale of Neogenix Oncology. To recap, Neogenix’s payment of fees to unregistered “finders” to raise money in some of its earlier rounds of financing called into question the company’s compliance with federal and state securities laws. Under such laws, just about any arrangement in which someone is paid a contingent or variable fee to raise capital for a company is prohibited, unless that person is registered as a broker-dealer or is a registered representative of a broker-dealer. After the SEC commenced an investigation into Neogenix’s practices, the company’s accountants concluded that potential investor lawsuits and/or governmental enforcement actions could give rise to large contingent liabilities on the company’s balance sheet. This uncertainty led to Neogenix being unable to raise further funds, necessitating the company’s bankruptcy filing. In this post, I’ll explore the likely reason why Neogenix had to take the drastic step of filing for bankruptcy to cure its securities violations. [Read more…]

Stock Options versus Stock Warrants – What’s the Difference?

I frequently hear clients and some of their advisers talk about “stock options” and “stock warrants” and there is often considerable confusion between the two. In this post, I’ll briefly describe the major distinctions between these instruments and how each can be used in a privately held company. [Read more…]

Neogenix Oncology: A Good Case Study on Securities Law (Non)Compliance by a High Growth Company – Part 2: What Neogenix Did

In my previous post, I described the events leading up to the Chapter 11 bankruptcy and supervised asset sale of Neogenix Oncology. To recap, Neogenix’s use of unregistered “finders” in some of its earlier rounds of financing called into question the company’s compliance with federal and state securities laws. After the SEC commenced an investigation, Neogenix’s accountants concluded that potential investor rescission rights could give rise to large contingent liabilities on the company’s balance sheet. This uncertainty led to Neogenix being unable to raise further funds, necessitating the company’s bankruptcy filing. In this post, I’ll explore how exactly Neogenix violated securities laws and the lessons this case study provides to startups and other growth stage companies. [Read more…]