The Securities and Exchange Commission (SEC) has charged 10 microcap companies for offering and selling securities in unregistered offerings that violated Regulation A.
Regulation A provides an exemption from registration under the Securities Act, allowing companies to raise money from the public if those companies meet specific requirements.
The SEC found that the companies had obtained qualification from the SEC for their securities offerings using Regulation A but made significant changes to their offerings without meeting the exemption requirements. These changes included improperly increasing the number of shares offered, changing the price of shares, failing to file updated financial statements, and engaging in prohibited offerings.
The SEC’s Chicago Regional Office Director, Daniel R. Gregus, emphasized that companies benefiting from Regulation A must meet its requirements and warned that those who circumvent the requirements or make unauthorized changes to their offerings will face action from the SEC.
Each of the 10 microcap companies agreed to cease and desist from violations and pay civil penalties ranging from $5,000 to $90,000.
The investigations were conducted by the SEC’s Chicago and Los Angeles Regional Offices, with assistance from the Division of Examinations and Division of Corporation Finance.
