something wicked this way comes: how to survive an sec ...5 sec investigations the sec is the...

Something Wicked This Way Comes: How to Survive an SEC Investigation or Enforcement Action

Polsinelli PC March 17, 2020Richard B. LevinJason A. NagiPaul J. Roshka

Introduction

Scope of the SEC’s Jurisdiction

SEC Investigations and Triggering Events

How to Respond to an SEC Investigation

The Value of Cooperation

The Wells Notice

Closing Investigations

Settlement

SEC’s 2020 Examination Priorities and Recent Enforcement Actions

Q&A

2

Agenda

3

SEC Jurisdiction

The definitions of “security” under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 are nearly

identical and each is broad enough to include the various types of instruments that are used in commercial marketplaces that one

might suspect to fall within the ordinary concepts of a security.

This would include common instruments like stocks, bonds, and notes, as well as the various collective investment pools and common

enterprises devised by persons seeking to generate profits from the efforts and investments of others (i.e. investment contracts and

instruments commonly known as securities).

Section 2(a)(1) of the Securities Act defines a “security” as:

[A]any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, . . . transferable

share, investment contract, . . . any put, call, straddle, option, or privilege on any security, certificate of deposit, . . . or any put, call,

straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or

instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt

for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing.

4

SEC Jurisdiction

The definition of “security” under the Securities Act does not include currencies.

The SEC has argued that investments in Bitcoin related schemes are investment contracts - a contract, transaction, or schemeinvolving: (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the effortsof the promoter or a third party. Securities Exchange Commission v. W.J. Howey, Co., 328 U.S. 293 (1946); Brotherhood. of Teamsters v.Daniel, 421 U.S. 837, 852 (1979).

Any investment in securities in the United States remains subject to the jurisdiction of the SEC regardless of whether the investment is made inU.S. dollars or a digital currency.

Individuals selling investments are typically subject to federal or state licensing requirements.

Whether a digital asset is a security for the purposes of the Securities Act and the Exchange Act has been at the heart of recent governmentactions against persons engaged in the sale of digital assets.

5

SEC Investigations

The SEC is the federal investigative and enforcement arm with respect to the securities activities in the United States.

This presentation provides an overview of SEC investigative and enforcement authority and the most effective way to deal with

SEC investigations and enforcement actions.

If the investigation is concluded without an enforcement action, the pendency of an investigation places a cloud over the

corporation that may inhibit its access to capital markets, chill relationships with vendors and customers, and distract and

demoralize management.

An enforcement action by the SEC may cast doubt on the reputation of the corporation or lead to lawsuits by shareholders or

other persons.

It may ultimately require significant changes in key management, and potential individual liability for the corporation’s officers,

directors, or employees.

6

SEC Investigations

SEC investigations are conducted by the Division of Enforcement .

Enforcement Division Staff are located at the SEC’s headquarters in Washington, D.C., and in eleven regional offices.

The Enforcement Division conducts investigations, recommends enforcement actions to the Commissioners, and negotiates

settlements that are subject to approval by the Commissioners.

The Enforcement Division also litigates before SEC Administrative Law Judges and in federal court.

How a company responds to misconduct or to a government investigation will directly affect the SEC’s views of the integrity of the

company and may have a significant impact on the outcome of an investigation.

7

Triggering Events

Examples of events that can trigger an investigation include:

Referrals, particularly in the insider trading context, from self-regulatory organizations such as the Financial Industry Regulatory

Authority (FINRA).

Referrals by the Department of Justice under the Foreign Corrupt Practices Act (FCPA).

Newspaper and other media reports.

Complaints from disgruntled investors. Investors frequently complain to the SEC. Sometimes these complaints come from

professional short-sellers.

Complaints from competitors.

Complaints from plaintiffs and their lawyers.

8

Informal Investigations

SEC investigations often begin with a request for the corporation’s voluntary cooperation in providing information to the SEC Staff.

While a corporation and its employees are under no obligation to comply with such a request, it is usually in the company’s interest to do so.

Voluntary cooperation will put the company in a more positive light in the Staff ’s consideration of the issues posed by the investigation.

Voluntary cooperation may encourage the SEC Staff not to issue a formal order of private investigation and may possibly reduce the

company’s requirement to disclose the informal inquiry in its periodic filings.

9

Informal Investigations

Voluntary cooperation gives the company some degree of control over the scope of the investigation and the amount and type of information

that must be produced.

Whether the company chooses to cooperate once it is advised of an informal inquiry, it should preserve relevant documents.

The destruction of relevant documents in these circumstances could lead to charges of obstruction of justice.

In determining which materials it is obliged to preserve or disclose in an informal inquiry, the company should consider the potential relevance

of the materials to the matters under inquiry, not the informal or formal nature of the inquiry.

Informal investigations are generally closed or converted to an investigation within sixty days.

10

Formal Investigations

The federal securities laws permit the SEC to issue subpoenas to compel the production of documents by company or by individuals and to

compel witnesses to appear and to testify under oath in connection with investigations of possible violations of the securities laws.

The SEC commissioners do not conduct these investigations.

They delegate their authority to members of the SEC Staff in the Division of Enforcement

This process is commenced by the issuance of a formal order of private investigation, which sets forth the basis for issuing the order and

the statutory sections that may have been violated.

The formal order also authorizes the staff in the Division of Enforcement to issue subpoenas and compel witnesses to appear under oath.

A formal order is not a finding of a fact or a form of adjudication.

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A formal order asserts the possibility of a violation of law by the company, and it may include a wide variety of persons.

Typically, SEC investigations commence with a broad request to the company for the production of documents covering a specified time

period, as well as possible subpoenas.

Such document requests and subpoenas can be narrowed by negotiation in order to prevent an undue burden and the production of

irrelevant documents.

The SEC’s Rules Relating to Investigations provides that a person who is compelled or requested to furnish documentary

evidence or testimony at a formal investigative proceeding shall, upon request, be shown the SEC’s formal order.

12


Once documents are collected, if the SEC Staff have questions, it will frequently call witnesses to testify regarding the matter.

The SEC may also opt to enter into proffer agreements in order to obtain information and initiate a discussion with witnesses,

including potential cooperating witnesses.

The SEC Staff will interview neutral witnesses without a court reporter.

An SEC investigation may cause persons with whom the company does business to receive a subpoena in the investigation,

which may negatively impact the company’s reputation and business relationships.

13

Responding to an SEC Investigation

Alert Senior Management

Consider an internal investigation

Gather Your Internal Response Team

Limit the scope to avoid distractions

Consult with Counsel

Compliance is “voluntary,” unless you:

Receive a subpoena pursuant to a formal order; or

Are a regulated entity, e.g., broker dealer, investment company, or investment adviser or an associated person

Responding to an SEC Investigation

Freeze

Identify all custodians of information and data

Stop automatic deletion and instruct employees to not delete anything relevant

Preserve all written and electronic records

Obtain Information From the SEC

Copies of Subpoenas

Formal Order of Investigation

Nature and Scope of Inquiry

Communicate with Counsel

Cooperation

The sliding scale of compliance to defiance

The SEC recognizes cooperation in settlements with the agency

Consider business goals and legal grounds when deciding strategy

Recent ICO settlements confirm the value of cooperation with the SEC

Be honest (of course) and be timely

Unreasonable wagon-circling is not necessary or helpful

If necessary, assert Fifth Amendment privilege against self-incrimination, but know that an adverse inference may be drawn in

civil proceedings and the matter could be referred to the Department of Justice for criminal prosecution.

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Cooperation

The SEC has stressed the role of cooperation in deciding the severity of punishment it will seek against a corporation whose employees are

believed to have been involved in violations of the federal securities laws.

In the Seaboard Report the SEC laid out the factors that are considered in determining whether a company should receive credit for good

cooperation.

The release stressed four key concepts:

Self-policing,

Self-reporting,

Cooperation, and

Remediation

17

Cooperation

In evaluating an individual’s cooperation, the Enforcement Division will consider:

Assistance provided by the individual;

Importance of the underlying matter;

Interest in holding the individual accountable; and

Profile of the individual.

The standards track the U.S. Department of Justice considerations for evaluating cooperation.

18

Wells Notice

After gathering documents and taking testimony, the SEC Staff typically makes a decision as to whether it will recommend that a particular

company or individual should be charged with a violation of the federal securities laws, which laws are believed to have been violated, and the

nature of the relief to be sought.

In virtually all cases other than those requiring emergency relief, the SEC Staff will contact counsel for the prospective defendant, state its

conclusion, and summarize the basis for that conclusion.

This is known as a Wells Notice.

Counsel has a time-limited opportunity to make a Wells submission which is a brief setting forth factual and legal arguments why an

enforcement action may not be appropriate.

Counsel can meet with the SEC staff before making the Wells submission.

Such a meeting can be a helpful means to obtain greater insight into the evidence the Staff believes supports its theories.

19

Wells Notice

The SEC Staff have the discretion, upon request, to allow the prospective defendant and counsel to review non-privileged portions of the

investigative file.

Viewing such information may allow counsel to more intelligently assess the risks of possible enforcement action.

The ultimate decision whether to institute an enforcement proceeding is the Commission’s, based upon the SEC Staff ’s recommendation.

That recommendation usually is a collaborative one.

Meetings with SEC staff and a Wells submission may be appropriate.

Counsel can inform the Staff of facts that may change its recommendation.

If the recommendation is not ultimately changed, counsel and the company may be successful in persuading the Staff that some

defendants should be excluded altogether or that the severity of charges should be reduced.

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Wells Notice

While there are benefits to making a from a Wells submission, there are also disadvantages to making a submission.

Wells submissions are discoverable in private civil litigation.

The SEC considers Wells submissions to be party admissions that can be used by the SEC in any future litigation.

A Wells submission may also provide the SEC with a “roadmap” to the defense in the event of litigation.

Federal prosecutors may obtain Wells submissions pursuant to an information request from the SEC and make use of the Wells

submission in a parallel criminal proceeding.

Counsel should consider the risks and benefits of making a Wells submission and carefully consider the content of the submission.

21

Wells Notice

If the potential defendant is unsuccessful in persuading the SEC Staff, they sends their recommendation in the form of a memorandum

together with the Wells submission, to the SEC Commissioners.

In a meeting open to the SEC Staff, but not to the public or to the prospective defendants, the SEC Commissioners decide whether an

enforcement action should be commenced.

Once that decision is made, counsel is usually advised of it and afforded a brief opportunity to determine whether to negotiate a

resolution of the case or to contest it.

It is possible to engage with the SEC Staff in a pre-Wells process in which counsel may make a submission akin to a Wells submission

and engage in a dialogue with the Staff, but without the receipt of a formal Wells notice.

22

Closing Investigations

The SEC has adopted a policy to send termination letters to the individuals, entities, or their counsel “at the earliest opportunity” when

the Staff determine not to recommend an enforcement action against them.

The SEC’s policy is to send termination letters regardless of whether the investigation was pursuant to a formal order.

The SEC Enforcement Manual provides that a termination letter

must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from

the staff ’s investigation of that particular matter. All that such a communication means is that the staff has completed its

investigation and that at that time no enforcement action has been recommended to the Commission.

23

Settlement

Settlement is not the same as “giving up”

Do not let emotions cloud your business judgment

Stops the legal fee bleed

Litigation is incredibly expensive

Provides a measure of finality

Remove the distraction of dealing with lawyers

Allows for a measure of control over the process

You decide or a judge will decide it for you

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2020 SEC Examination Priorities

Earlier this year the SEC Office of Compliance Inspections and Examinations (OCIE) published the Examination Priorities of the SEC

staff for 2020.

The examination priorities letter is a useful resource for all broker-dealers, registered investment advisers, and FinTech firms because

it presents a window into the areas of focus of the OCIE staff.

In the letter the SEC staff noted they will be focusing on FinTech and innovation, including digital assets and electronic investment

advice.

The SEC noted:

Innovations and advancements in financial technologies, methods of capital formation, market structures, and investor interfaces

continue to grow at a rapid pace. . . . OCIE remains focused on keeping abreast of these developments, and examinations will focus

on firms’ use of these data sets and technologies to interact with and provide services to investors, firms, and other service providers

and assess the effectiveness of related compliance and control functions.

https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2020.pdf

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Digital Assets

The digital assets market has grown rapidly and presents various risks, including for retail investors who may not adequately understand the

differences between these assets and more traditional products.

OCIE will continue to identify and examine SEC-registered market participants engaged in this space.

Examinations will assess: (1) investment suitability, (2) portfolio management and trading practices, (3) safety of client funds and assets,

(4) pricing and valuation, (5) effectiveness of compliance programs and controls, and (6) supervision of employee outside business

activities.

Electronic Investment Advice

OCIE will continue its focus on RIAs that provide services to their clients through automated investment tools and platforms, often referred to

as “robo-advisers.”

Areas of focus include: (1) SEC registration eligibility, (2) cybersecurity policies and procedures, (3) marketing practices, (4) adherence to

fiduciary duty, including adequacy of disclosures, and (5) effectiveness of compliance programs.

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Transfer Agents

Transfer agents serve as agents for securities issuers and play a critical role in the settlement of securities transactions.

Key functions of transfer agents include, maintaining issuers’ security holder records, recording changes of ownership, canceling and issuing

certificates, distributing dividends and other payments to security holders, and facilitating communications between issuers and security

holders.

OCIE will continue to examine transfer agents’ core functions, including: the timely turnaround of items and transfers, recordkeeping and

record retention, and safeguarding of funds and securities.

OCIE examinations will also focus on the requirement for transfer agents to annually file a report by an independent accountant concerning

the transfer agent’s system of internal accounting controls, as well as compliance with obligations to search for lost security holders and

provide notice to unresponsive payees.

Examination candidates will include transfer agents that serve as paying agents for issuers, transfer agents developing blockchain

technology, and transfer agents that provide services to issuers of microcap securities, private offerings, crowdfunded securities, or digital

assets.

27

Telegram

The SEC filed an emergency action and obtained temporary restraining order against two offshore entities conducting an

alleged unregistered, ongoing digital token offering in the U.S. and overseas that has raised more than $1.7 billion of investor

funds.

The SEC alleges Telegram and its wholly-owned subsidiary TON Issuer began raising capital in January 2018 to finance the

companies’ business, including the development of their own blockchain, the “Telegram Open Network” or “TON Blockchain,” as well

as the mobile messaging application Telegram Messenger.

The SEC claims the defendants sold approximately 2.9 billion digital tokens called “Grams” at discounted prices to 171 initial

purchasers worldwide, including more than 1 billion Grams to 39 U.S. purchasers.

The SEC alleges Telegram promised to deliver the Grams to the initial purchasers upon the launch of its blockchain by no later than

October 31, 2019, at which time the purchasers and Telegram will be able to sell billions of Grams into U.S. markets.

The SEC claims the defendants failed to register their offers and sales of Grams, which are securities, in violation of the registration

provisions of the Securities Act.

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Block.one

The SEC settled charges against blockchain technology company Block.one for conducting an unregistered initial coin

offering (ICO) of digital tokens that raised the equivalent of several billion dollars over approximately one year.

The company agreed to settle the charges by paying a $24 million civil penalty.

Block.one which has operations in Virginia and Hong Kong, conducted an ICO between June 2017 and June 2018.

The order found that Block.one stated it would use the capital raised in the ICO for general expenses, and also to develop software

and promote blockchains based on that software.

Block.one’s offer and sale of 900 million tokens began shortly before the SEC released the DAO Report of Investigation and continued

for nearly a year after the report’s publication, eventually raising several billion dollars' worth of digital assets globally, including a

portion from US investors.

Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an

exemption from the registration requirements.

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ICOBox

The SEC sued ICOBox and its founder Nikolay Evdokimov for conducting an illegal $14 million securities offering of ICOBox’s digital

tokens and for acting as unregistered brokers for other digital asset offerings.

According to the SEC, ICOBox raised funds in 2017 to develop a platform for initial coin offerings by selling, in an unregistered

offering, roughly $14.6 million of “ICOS” tokens to over 2,000 investors.

The complaint alleges that defendants claimed the tokens would increase in value upon trading and that ICOS token holders would be

able to swap them at a discount for other tokens promoted on the ICOBox platform. According to the complaint, the ICOS tokens are

virtually worthless.

The complaint also alleges that ICOBox failed to register as a broker but acted as one by facilitating initial coin offerings that

raised more than $650 million for dozens of clients.

The SEC’s complaint charges ICOBox and Evdokimov with violating the registration requirements of the federal securities laws and

seeks injunctive relief, disgorgement with prejudgment interest, and civil money penalties.

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Bitqyck

The SEC settled charges with Bitqyck and its founders, who allegedly defrauded investors in securities offerings of two digital assets, Bitqy and

BitqyM, and operated an unregistered exchange to permit trading in one of them, a digital token called Bitqy.

According to the SEC, Bitqyck and founders Bruce Bise and Sam Mendez created and sold Bitqy and BitqyM in unregistered securities

offerings to more than 13,000 investors, raising more than $13 million.

Investors allegedly received $4.5 million for referring new investors to Bitqyck but collectively lost more than two-thirds of their investment in

the Dallas-based company.

Bitqyck, aided and abetted by its founders, also is alleged to have illegally operated TradeBQ, an unregistered national security exchange

offering trading in a single security, Bitqy.

Without admitting or denying the allegations, Bitqyck, Bise and Mendez consented to final judgments agreeing to all the injunctive relief.

Bitqyck also consented to an order requiring that it pay disgorgement, prejudgment interest and a civil penalty of $8,375,617 and

Bise and Mendez consented to the entry of an order that they each pay disgorgement, prejudgment interest and a civil penalty of

$890,254 and $850,022, respectively.

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ICO Rating

ICO Rating agreed to pay $268,998 to settle charges that it failed to disclose payments received from issuers for publicizing their

digital asset securities offerings.

The SEC's order found that between December 2017 and July 2018, ICO Rating produced research reports and ratings of blockchain-

based digital assets, including “tokens” or “coins” that were securities, and published this content on its website and on social media.

ICO Rating billed itself as “a rating agency that issues independent analytical research,” and stated that its mission is “to help

the market achieve the necessary standards of quality, transparency and reliability.” However, ICO Rating failed to disclose that it was

paid by certain issuers whose ICO offerings it rated.

ICO Rating violated the anti-touting provisions of Section 17(b) of the Securities Act.

ICO Rating agreed to cease and desist from committing or causing any future violations of these provisions, to pay disgorgement and

prejudgment interest of $106,998, and a civil penalty of $162,000.

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SimplyVital Health

The SEC settled charges against a New England-based blockchain company for offering and selling approximately $6.3 million of

securities to the public in unregistered transactions.

SimplyVital Health publicly announced its plan to conduct an ICO to raise money to further its development of Health Nexus, a

"healthcare-related blockchain ecosystem."

SimplyVital offered a new token called Health Cash, or HLTH, which would be used as currency in the Health Nexus.

SimplyVital concurrently announced that it would conduct a “pre-sale” of its HLTH tokens, in which it offered investors

Simple Agreements for Future Tokens, or SAFTs, under which it sold HLTH tokens that would not be delivered to investors

unless and until created by SimplyVital.

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SimplyVital Health

SimplyVital did not file a registration statement with the SEC or qualify for an exemption from registration before offering and

selling HLTH to the public through the SAFTs.

SimplyVital raised approximately $6.3 million from its unregistered sale of securities in between September 2017 and April

2018.

After concluding its pre-sale in April 2018, SimplyVital ultimately decided not to offer and sell HLTH during its scheduled ICO.

In 2019, SimplyVital voluntarily returned to investors substantially all of the funds raised during its pre-sale.

SimplyVital violated the registration provisions of Sections 5(a) and (c) of the Securities Act.

34

Middleton

The SEC announced fraud charges against a Brooklyn individual and two entities under his control who allegedly engaged in a

fraudulent scheme to sell digital securities to investors and to manipulate the market for those securities.

The court entered an emergency freeze to preserve at least $8 million of the $14.8 million the defendants raised in 2017 and

2018 in an offering of digital securities.

The SEC claims the Defendants marketed and sold securities called “VERI” tokens on the internet, inducing retail investors to invest

based on multiple material misrepresentations and omissions.

The Defendants allegedly knowingly misled investors about their prior business venture and the use of offering proceeds, touted

oversized – but fictitious – investor demand for VERI, and claimed to have a product ready to generate revenue when no such product

existed.

The SEC claims Middleton and Veritaseum with violating the registration and antifraud provisions of the U.S. federal securities laws,

and Middleton with additionally violating the antifraud provisions on the basis of his manipulative trading.

35

Longfin

The SEC filed a fraud action against Longfin and its CEO for falsifying the company’s revenue and, together with a former Longfin

consultant, for fraudulently securing the company’s listing on Nasdaq.

The SEC’s prior charges against these defendants and two others resulted in a preliminary injunction freezing more than $27

million in allegedly illegal trading proceeds from unregistered distributions of Longfin stock.

The SEC claims Longfin and its CEO, conducted a fraudulent public offering of Longfin shares.

The complaint alleges that Longfin and the CEO obtained qualification for a Regulation A+ offering by falsely representing in SEC

filings that the company was principally managed and operated in the U.S. when, in fact, the company’s operations, assets and

management remained offshore.

Longfin and the CEO then engaged in a fraudulent scheme by distributing over 400,000 shares of Longfin to insiders and affiliates to

meet certain Nasdaq listing criteria, without obtaining payment for any of these shares and, along with a Longfin consultant

misrepresented to Nasdaq the number of qualifying shareholders and shares sold in the offering.

36

Longfin

The SEC’s complaint alleges that Longfin and the CEO also engaged in an accounting fraud, recording more than $66 million in sham

revenue, representing nearly 90% of Longfin’s total 2017 reported revenue.

The SEC’s prior action alleged that Longfin, Meenavalli, Altahawi, and two affiliated individuals, Dorababu Penumarthi and Suresh

Tammineedi, illegally distributed and sold more than $33 million of Longfin stock in unregistered transactions.

Altahawi, Penumarthi, and Tammineedi agreed to settlements that would fully resolve the SEC’s charges and have agreed to

surrender the previously frozen funds towards paying monetary relief.

The proposed settlement would require Altahawi to return $21 million of allegedly ill-gotten gains, pay a $2.9 million penalty,

and surrender all his Longfin shares.

The proposed settlements require Penumarthi to pay more than $1.7 million and Tammineedi to pay more than $241,000, in

addition to injunctive relief.

37

Kik Interactive

The SEC sued Kik Interactive for conducting an illegal $100 million securities offering of digital tokens.

The SEC claims Kik sold the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.

The SEC alleges Kik had lost money for years on its sole product, an online messaging application, and the company’s management

predicted internally that it would run out of money in 2017.

In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens.

Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from

U.S. investors.

The SEC alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.

The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity.

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Kik Interactive

Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that

demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to

reward other companies that adopt Kin.

At the time Kik offered and sold the tokens, the SEC alleges these services and systems did not exist and there was nothing to

purchase using Kin.

Kik also allegedly claimed that it would keep three trillion Kin tokens, Kin tokens would immediately trade on secondary markets, and

Kik would profit alongside investors from the increased demand that it would foster.

The Kin offering involved securities transactions, and Kik was required to comply with the registration requirements of the U.S.

securities laws.“

The SEC charges Kik Interactive with violating the registration requirements of Section 5 of the Securities Act.

39

Floyd Mayweather, Jr.

The SEC announced settled charges against professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled, known as DJ

Khaled, for failing to disclose payments they received for promoting investments in ICOs.

These were the SEC's first cases to charge touting violations involving ICOs.

The SEC's orders found that Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from

Centra Tech Inc., and that Khaled failed to disclose a $50,000 payment from Centra Tech, which he touted on his social media

accounts as a “Game changer.”

Mayweather's promotions included a message to his Twitter followers that Centra's ICO “starts in a few hours. Get yours before they sell out,

I got mine…”

A post on Mayweather's Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said:

“You can call me Floyd Crypto Mayweather from now on.”

The SEC order found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.

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Floyd Mayweather, Jr.

Mayweather and Khaled’s promotions came after the SEC issued its DAO Report in 2017 warning that coins sold in ICOs may be securities

and that those who offer and sell securities in the U.S. must comply with federal securities laws.

Without admitting or denying the findings, Mayweather and Khaled agreed to pay disgorgement, penalties and interest.

Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest.

Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.

Mayweather agreed not to promote any securities, digital or otherwise, for three years, and Khaled agreed to a similar ban for two years.

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Polsinelli’s FinTech and Regulation Practice

Polsinelli’s FinTech and Regulation Practice helps clients meet the challenges posed by the development of these new technologies, including

digital assets and ICOs.

Bringing together attorneys from across the firm, members of the FinTech and Regulation practice advise clients on a variety of matters, including:

Corporate and transactional issues

Cybersecurity

Government investigations and compliance

Intellectual property

Labor and employment

Litigation

Public policy

Regulation by the CFTC, the SEC and FinCEN

Securities and corporate finance

Tax

Polsinelli’s FinTech and Regulation Practice has been rated by Chambers as one of the best FinTech practices in the United States.

https://www.polsinelli.com/industries/financial-technology-fintechhttps://chambers.com/department/polsinelli-pc-fintech-legal-fintech-49:2744:225:1:65601

Contact

To learn more about our FinTech and Regulation practice, or to contact a member of our team, click here or visit our website at polsinelli.com.

For additional information, please call:

Richard B. Levin

Shareholder and Chair FinTech and Regulation Practice

Tel. 303-583-8261

Email: [email protected]

Jason A. Nagi Paul J. Roshka

Shareholder Shareholder

Tel. 212-644-2092 Tel. 602-650-2098

Email: [email protected] Email: [email protected]

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Polsinelli PC provides this material for informational purposes only. The material provided herein is general and is not intended to be legal

advice. Nothing herein should be relied upon or used without consulting a lawyer to consider your specific circumstances, possible changes

to applicable laws, rules and regulations and other legal issues. Receipt of this material does not establish an attorney-client relationship.

Polsinelli is very proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that

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© 2020 Polsinelli® is a registered trademark of Polsinelli PC. Polsinelli LLP in California. Polsinelli PC (Inc.) in Florida.

polsinelli.com

real people.

Areas of Focus

Financial Technology (FinTech) and

Regulation

Financial and Securities Litigation

Government Investigations

Public Policy

Securities & Corporate Finance

Technology

Financial Regulatory Enforcement

Technology Transactions

International

Education

J.D., University of Denver Sturm College

of Law, 1996, Managing Editor

University of Denver Law Review

B.A., Colorado College, 1992, History

Bar Jurisdictions

District of Columbia, 2003

Colorado, 1996

Registered Foreign Lawyer - SRA,

England and Wales, 2016

Court Admissions

U.S. District Court, District of Colorado,

1997

U.S. Court of Appeals, Tenth Circuit,

1997

State of Colorado, 1996

real perspective.SM

Richard B. LevinChair Financial Technology & Regulatory [email protected], Washington, D.C.303.583.8261

"I invest in each client by learning about their business."

OverviewRichard Levin is the Chair of Polsinelli’s Chambers rated FinTech and Regulation Practice. He

brings his experience as a senior legal and compliance officer on Wall Street and in London to

bear in advising clients on corporate, securities and regulatory issues. A problem-solver by nature,

his practice focuses on helping financial services and technology (FinTech) clients identify and

address regulatory issues as they build their businesses.

The FinTech sector is experiencing rapid changes that are producing innovative new technologies:

digital currencies, blockchain technology, peer to peer lending, robo advisors, crowdfunding

portals, and electronic trading platforms. These changes are challenging early stage companies

and established financial services firms to understand the legal and regulatory issues associated

with the development of these innovative technologies. Polsinelli is at the vanguard of these

changes.

Richard’s practice focuses on the representation of early stage and publicly traded companies in

the FinTech space, including investment banks, broker-dealers, investment advisers, peer to peer

lending platforms, digital currency trading platforms, alternative trading systems (ATSs), and

exchanges. He has been advising these clients on legal and regulatory issues since the start of

electronic trading in the late 1990s.

Before entering private practice, Richard served as the Global Head of Product Development for

Compliance and Operations for a leading global investment bank and as General Counsel and

Chief Compliance Officer of three U.S. ATSs and a U.K. based multi-lateral trading facility (MTF).

He played a leadership role in the launch of two successful joint ventures of leading global

investment banks. Richard began his career on Wall Street by serving as the General Counsel of

one of the original Electronic Communications Networks (ECNs), and as Assistant General Counsel

and Regulatory Affairs Officer of the largest Nasdaq market maker. His current and past clients

include leading national financial institutions, multinational financial services holding companies,

and institutions engaging in global investment banking, investment management, securities, and

other financial services with institutional clients. Richard has represented clients before regulators

in Canada, Hong Kong, Japan, and the United Kingdom.

Before joining Polsinelli Richard was the co-chair and founder of the Digital Currency Team of a

leading U.S. law firm. Richard is a frequent speaker at conferences on blockchain technology,

digital assets, regulatory, and market structure issues and is the co-author of several chapters of

books, including the chapter on U.S. regulation of virtual currencies for the Handbook of Digital

Currency, the chapter on SEC and CFTC regulation of blockchain technology for the Handbook of

Blockchain, Digital Finance, and Inclusion – both published by Elsevier, Code is Not Law: Code

Can be a Language Used to Create Smart Contracts, a chapter in Blockchain in Financial Markets

and Beyond, and the chapter on regulation of robo advisers in WealthTech – Wealth Management

in the FinTech Age. Richard was recently identified as one of twelve leading lawyers in Blockchain

and Cryptocurrencies by Chambers Global.

DistinctionsRanked by Chambers and Partners for Blockchain & Cryptocurrencies - Global-Wide

2017-2020

MembershipsAmerican Bar Association

Bar Association of the District of Columbia

Chamber of Digital Commerce – Lawyers Committee

Colorado Bar Association

National Committee on U.S. – China Relations

Securities Industry Financial Markets Association: Legal and Compliance Division

Wall Street Blockchain Alliance

Key MattersRoutinely represents new ATS before the SEC and FINRA.

Represented the first ATS focused on infrastructure investments before the SEC and FINRA

during the ATS application process.

Advised the developer of a U.S. ATS in negotiations with the African Development Bank

(ADB) related to the formation of a joint venture to develop and operate an African

infrastructure development platform.

Represented the U.S. investment banking subsidiary of a leading global bank in a state

securities regulatory action involving more than $20 billion in securities transactions. As part

of settlement, the client avoided potential negative publicity and was permitted to register as

a broker-dealer.

Counseled the U.S. subsidiary of a European investment bank after it failed to report several

thousand transactions over a three-year period to FINRA. Successfully negotiated a

settlement with FINRA that avoided substantial monetary sanctions and negative publicity.

Advised the client in the implementation of remedial measures to address potential future

violations.

Represented a U.S. investment bank in a FINRA enforcement action involving anti-money

laundering compliance and research issues. Successfully negotiated a settlement with

FINRA.

Advised several early stage companies that planned to operate platforms for the sale of

unregistered securities under Rule 506 and the proposed crowdfunding rules.

Represented two early stage companies that planned to establish new SEC registered

securities exchanges.

Counseled U.S. broker-dealer subsidiaries of several European and Asian banks in FINRA

regulatory matters.

Advised an early stage company launching a virtual currency trading platform.

Represented several peer-to-peer lending platforms before the SEC and state securities

regulators.

Represented several regulated investment advisors before the SEC and state securities

regulators.

Represented a family office before the CFTC with respect to commodity pool operator status.

Lobbied on behalf of a broker-dealer and ATS that supported the JOBS Act.

Advised boards of directors and management on general corporate, securities, mergers and

acquisitions and intellectual property matters in the U.S. and abroad.

IntelligenceHow to Survive an SEC Investigation or Enforcement Action

March 17, 2020

BitBlog Bi-Weekly Update

Co-author, Polsinelli BitBlog

March 4, 2020

Under Siege - Zen Master Steven Seagal Loses to the SEC

Co-Author, Polsinelli BitBlog

February 27, 2020

Blockchain Litigation Year In Review (Part 2): Lessons From 2019 And What’s Ahead For 2020

February 19, 2020

Blockchain Litigation Year in Review (Part 1): Lessons From 2019 And What’s Ahead For 2020

February 19, 2020

Let Slip the Dogs of War…the SEC vs. Telegram

January 17, 2020

Wind of Change - The Year FinTech Came in From the Cold Polsinelli BitBlog: Year End Edition


January 2, 2020

AI, Blockchain & Smart Contracts in Health Care

December 4, 2019

BitBlog Weekly Update


October 29, 2019

Polsinelli’s Levin on Regulating Facebook’s Libra

TV Interview, Bloomberg Markets Balance of Power

October 25, 2019

Balance of Power: Digital Currency, Trump Impeachment (Podcast)

Mentioned, Bloomberg

October 23, 2019

BitBlog Weekly Summary


October 1, 2019

CME Group Plans To Launch Bitcoin Options Early Next Year

Quoted, Law360

September 20, 2019

FINRA and SEC Issue Joint Statement on Security Token and Custody Rules


September 13, 2019



September 6, 2019

Telegram Pushes Ahead with Plans for Cryptocurrency

Quoted, San Francisco Chronicle

August 30, 2019

As Facebook's Libra Hit with Scrutiny, Telegram to Launch its Own Cryptocurrency

Quoted, The Sydney Morning Herald

August 29, 2019


Quoted, WA Today

August 29, 2019


Quoted, The Age

August 29, 2019

#CryptoCorner: Gemini Joins Silvergate Exchange Network, Telegram to Issue Digital CurrencyWithin Two Months, Swiss Crypto Firm Sygnum Aiming for Banking License in Singapore

Quoted, Investor Ideas

August 28, 2019

Telegram’s Cryptocurrency Stays On Course For Its Launch

Quoted, Inside Bitcoins

August 28, 2019

Telegram Pushes Ahead With Plans for ‘Gram’ Cryptocurrency

Quoted, The New York Times

August 27, 2019

BitBlog Weekly Summary: Digital Asset Regulations in New York State


August 23, 2019

A Pocketful of Quarters: SEC Provides Digital Asset Offering Guidance


August 5, 2019

Time To Kik SAFTS To The Curb

Author, BlockTribune

June 25, 2019

Polsinelli FinTech Chair Richard B. Levin to Speak at the Smart Regulation and the Future ofFinancial Regulation Conference at the Antonin Scalia Law School of George Mason University

Presenter

May 16, 2019

Polsinelli FinTech Chair Richard B. Levin to Speak at the Asian Leadership Conference

Presenter

May 15, 2019

Crypto-Miners: Are They Broker-Dealers or Math Geeks?

Quoted, FinOps Report

May 7, 2019

Polsinelli FinTech Chair Richard B. Levin to Moderate at Rocky Mountain Securities Conference

Moderator

May 3, 2019

Crypto Attorneys Weigh in on SEC Token Framework

Quoted, Brave New Coin

April 13, 2019

A “Token” of Appreciation – Take 1: Blockchain Technology and Digital Crypto-Assets:Temporary Hype or the Dawn of a New Era of Disruptive Technologies?

Panelist, ABA Section of International Law Conference, Washington, D.C.

April 9 -12, 2019

Polsinelli FinTech Chair Richard B. Levin to Moderate at DC Blockchain Summit

March 7, 2019

Winklevoss-founded crypto exchange Gemini secures critical third-party test of its securityand design

Quoted, MarketWatch

January 29, 2019

Colorado wants to be an epicenter of blockchain technology. Can it succeed?

Denver Business Journal

Quoted, Denver Business Journal

December 6, 2018

Polsinelli Shareholder Richard B. Levin to Present at Chambers FinTech Seminar - 11.20.2018

Presenter

November 20, 2018

Polsinelli FinTech Chair Richard B. Levin and Principal Colby B. Springer to Present at WIPF inNew Delhi, India - 11.14-16-2018

Presenter

November 14 - 16, 2018

Polsinelli Shareholder Richard B. Levin to Moderate a FinTech Panel in Singapore - 11.14.2018

Moderator

November 14, 2018

SEC Charges ICO Token Offering Platform as an Unregistered Broker-Dealer


November 5, 2018

SEC Charges Unlicensed Bitcoin-Funded Swap Dealer and CEO


November 2, 2018

Polsinelli FinTech Chair Rick Levin to Present at NSCP National Conference - 10.30.2018

Presenter

October 30, 2018

SEC Launches New Strategic Hub for Innovation and Financial Technology


October 26, 2018

SEC Suspends Trading in Company Making False Cryptocurrency-Related Claims About SECRegulation and Registration


October 25, 2018

Fidelity's Foray Into Bitcoin Likely To Boost Crypto Appeal

Quoted, Law360

October 18, 2018

Crypto-assets Do Not Pose a Material Risk to Global Financial Stability

Author, Polsinelli BitBlog

October 11, 2018

SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval


October 11, 2018

Court Denies Defendants' Motion to Dismiss in Commodity Fraud Case Involving the VirtualCurrency My Big Coin


October 11, 2018

SEC To Reconsider Staff's Rejection Of 9 Bitcoin ETFs

Quoted, Law360

August 24, 2018

ProShares Bitcoin-Backed ETF Decision is Due Thursday

Quoted, MarketWatch

August 22, 2018

Even Free Tokens Face Regulatory Heat as Coin Offerings Scrutinized

Quoted, The Wall Street Journal

August 14, 2018

SEC Delay on Cryptocurrency ETF is More a Speed Bump Than a Red Flag, Market Insiders Say

Quoted, MarketWatch

August 8, 2018

Decoding Cryptocurrency

Quoted, Business Jet Traveler

July 2018

Crypto Influencers Pump Up Markets With $105,000 Tweets

Quoted, Bloomberg

June 26, 2018

Wells Fargo Brokers Loved Structured Notes

Quoted, Bloomberg

June 26, 2018

Panel Discussion: Putting Blockchain Solutions into Production

Presenter, SIFMA Fintech Conference, New York, NY

June 20-21, 2018

'It was true for tulips, junk bonds, and mortgage-backed securities, and now crypto': There's abig shakeup happening in the ICO market, and it should be keeping investors up at night

Quoted, ThisInsider

June 19, 2018

New Development inTechnology

Presenter, National Society of Compliance Professionals (NSCP) Spring Conference, Chicago, IL

June 4, 2018

SEC launches HoweyCoins — an ICO Investment Satire Intended to Educate Gullible InvestorsAbout ICO Scams

BraveNewCoin

May 23, 2018

Initial Coin Offerings (ICOs) and Cryptocurrency (FinTech Track)

Speaker, 2018 FINRA Annual Conference. Washington, D.C.

May 21-23, 2018

Blockchain Technology & Cryptocurrencies

Moderator, Video Game Bar Association (VGBA) Summit, Los Angeles, CA

May 14-15, 2018

Polsinelli Shareholder Richard B. Levin to Present at Rocky Mountain Securities Conference

May 11, 2018

What is a SAFT? A Crypto Fundraising Method Drawing Regulatory Scrutiny

Quoted, MarketWatch

May 10, 2018

Startups Love This Cryptocurrency Strategy. Regulators Say Not So Fast

Quoted, Wall Street Journal

April 24, 2018

How the Syndicated Loan Market Is Dealing with the Potential Replacement of LIBOR

April 20, 2018

Major VC Firm Asked SEC to Not Categorize Cryptocurrency as Security

Quoted in News BTC

April 20, 2018

Venture Capitalists Seek ‘Safe Harbor’ for Virtual Currencies

Featured in The New York Times

April 19, 2018

Cryptocurrency Firm Coinbase in Talks to Become SEC-Regulated Brokerage

Featured in Wall Street Journal

April 6, 2018

How FinTech Could Reboot LIBOR

April 2018

Initial Coin Offerings: Can Regulators Curb the Risks?

Featured in Fair Observer

April 1, 2018

Initial Coin Offerings: Can Regulators Curb the Risks?

Featured in Wharton e-Newsletter

March 27, 2018

How Law Firms Can Prepare for FinTech Wave

New York Law Journal

March 26, 2018

Research Paper Says Issuers of ICO Tokens Will Face Class Action Lawsuits

March 2018

Cryptocurrency Issuers Clean Up, Shun US investors as SEC Gets Tough

CNBC

March 21, 2018

Blockchain: Coming to a CMBS Near You

March 12, 2018

Cryptocurrency Class Action Lawsuits: A New Frontier

March 2018

Shareholder Richard B. Levin to Present at Chamber of Digital Commerce DC

Presenter, Chamber of Digital Commerce DC Blockchain Summit

March 5, 2018

Crypto Markets Are Young, Hungry and Just Getting Started

February 22, 2018

Issuers of Tokens Beware: Class Action Lawsuits Are Coming

February 2018

Rick Levin on Cryptocurrency Crime: The Days of Crypto-Anarchy are Numbered

CoinGeek

February 20, 2018

ICO Rules and Regs: Initial Coin Offerings Under Regulatory Spotlight

Featured in John Lothian News

February 16, 2018

Polsinelli Shareholder Richard B. Levin to Moderate at CryptoCon 2018

Moderator, CryptoCon 2018

February 15, 2018

Blockchain Explained: It Builds Trust When You Need It Most

Featured in CNET

February 12, 2018

Regulations & Global Jurisdictions Panel

Presenter, London Blockchain Week 2018

January 23, 2018

Will Bitcoin Futures Legitimize Cryptocurrencies?

Featured in U.S. News & World Report

December 14, 2017

Bitcoin Futures Just Hit Wall Street, and the Price is Surging

Featured in Yahoo Finance

December 11, 2017

Bitcoin Futures Bring Digital Currencies To Wider Market

Featured in Law360

December 11, 2017

Who Controls Your Bitcoin? Why All That New Wealth Isn’t Really In Your Hands

Featured in Verdict

December 11, 2017

Is it Time For Bankers to Rethink Bitcoin?

Featured in American Banker

November 30, 2017

How Global Regulators Are Looking to Regulate Digital Assets

Featured in Business News Network

November 30, 2017

Nasdaq Prepares Launch of Bitcoin Futures Early Next Year

Featured in Traders Magazine

November 30, 2017

Top Bitcoin Exchange Site Keeps Crashing as Bitcoin Surge Reaches $11,000

Featured on Yahoo News

November 29, 2017

Overview of FinTech

Presenter, Multilaw FinTech webinar

November 29, 2017

AI and Identity RegTech

ID/AI Conference - Singapore FinTech Festival

November 17, 2017

ICO Regulation and Investment

Inclusive Blockchain Conference - Singapore FinTech Festival

November 15, 2017

Webinar: Blockchain in Health Care - Basics, Smart Contracts, and Other Applications

November 9, 2017

Blockchain in Health Care - The Basics, Smart Contracts, and Other Applications

November 9, 2017

Bitcoin Moves Toward Financial Mainstream with Futures Contracts

Featured in American Banker article

November 1, 2017

Bitcoin: The Future of Money

Presenter, World Knowledge Forum

Seoul, Korea

October 18, 2017

Bitcoin: The Future of Money

Co-Presenter, World Knowledge Forum; Seoul, Korea

October 18, 2017

China Crypto Will Be “Bigger Than Bitcoin”

Featured in BlockTribune article

September 15, 2017

FinTech Regulation is Not a Zero Sum Game

September 2017

SEC Bulletin May Bring Order To Wild West ICO Market

Featured in Investor's Business Daily

August 26, 2017

ICOs and Other Hot Things in Digital Currencies

Co-Presenter, FinTech Canada Conference

August 18, 2017

U.S. Regulators Enter the FinTech Sandbox

July 2017

Innovation in FinTech and Dispelling the Myth that Regulations Will Stifle Innovation

Panelist, 2017 Western Regional Conference

National Asian Pacific American Bar Association

San Jose, California

July 21, 2017

real people.

Areas of Focus

Bankruptcy and Restructuring

Bankruptcy & Financial Distress

Litigation

Financial Services


Regulation

Insolvency

Litigation and Dispute Resolution

Financial Services Litigation

Commercial Litigation

Education

J.D., Brooklyn Law School, 2000, Moot

Court Honor Society

B.A., cum laude, New York University,

1997, with honors in English

Bar Jurisdictions

New Jersey

New York

Court Admissions

U.S. District Court, Southern District of

New York

U.S. District Court, District of New Jersey

U.S. District Court, Eastern District of

New York

U.S. District Court, Northern District of

New York

real perspective.SM

Jason A. [email protected] York212.644.2092

"I work to understand the economic and non-economic driversunderlying each matter, to best meet our client’s goals."

OverviewJason Nagi charts a path to victory for each of his clients. Jason uses his creditor-focused, finance

experience to counsel early stage and mature FinTech companies as well as traditional and

non-traditional lenders, in both business ventures and litigation. In addition to appearing before

state courts, and U.S. federal district and bankruptcy courts, Jason regularly counsels companies in

applying blockchain technology to their respective industries, fundraising efforts, and regulatory

issues. Jason advises clients on SEC, CFTC, FinCEN, and state-level MSBs, including the

issuance of securitized digital assets.

Jason represents securitized lenders, special servicers, banks, and private lenders in enforcing

distressed commercial loans, conducting sales via the Uniform Commercial Code, fraudulent

transfer actions, and through every stage of insolvency proceedings. In addition to his experience

in Single Asset Real Estate bankruptcy cases, Jason has represented agent banks and majority

lenders for syndicated loans, in out-of-court workouts, and both contested and consensual court

supervised restructurings. Jason has represented large international corporations, insurance

companies, financial institutions, and individual businesses in the federal and state courts in New

York. He has substantial experience representing litigants involved in:

Commercial foreclosure actions

Chapter 11 bankruptcy proceedings

Commercial litigation including, real estate, breach of contract, fraud claims

SEC enforcement actions and AML investigations

Financial institution litigation

MembershipsWall Street Block Chain Alliance, Advisory Board

American Bankruptcy Institute

New York Institute of Credit

Association for the Bar of the City of New York

Key MattersObtained accelerated payment in full on a judgment of foreclosure and sale in a contested

bankruptcy process involving multiple potential bidders.

Assisted a client in the purchase of an economic interest in a defaulted loan without slowing

down the foreclosure.

Assisted a client in negotiating the purchase of an economic interest in a hotel with

substantial value on the eve of a foreclosure sale and in a manner that did not require

additional motion practice to identify the new purchaser while also avoiding potentially

significant delay.

Obtained a preliminary injunction and six-figure settlement of fraudulent transfer action

seeking to unwind sale of significant real estate.

Obtained a preliminary injunction enjoining judgment debtor and transferee from further

encumbering real property that was the subject of a fraudulent transfer action. Negotiated a

six-figure settlement of this unsecured claim based on a foreign judgment.


March 17, 2020

BitBlog Bi-Weekly Update


March 4, 2020



February 27, 2020

Digital Assets: What to Do When the SEC Comes Calling

Quoted, Crowdfund Insider

January 26, 2020

Wind of Change - The Year FinTech Came in From the Cold Polsinelli BitBlog: Year End Edition


January 2, 2020



September 6, 2019

BitBlog Weekly Summary: Kik Kicks Back and the SEC continues its enforcement campaignagainst ICOs


August 16, 2019

Blockchain in 2019: Bankruptcy and Beyond

Speaker, American Bankruptcy Institute – 13th Annual Credit & Bankruptcy Symposium, Uncasville, CT

May 3, 2019

Future NOW

Speaker, Trigild Spring Conference 2019, Dallas, TX

April 18, 2019

On Being Open and Honest With Regulators: The Gladius Network Cease & Desist Order andthe SEC’s Map for ICO Remediation

Author, Crowdfund Insider

March 24, 2019

Heard at Tel Aviv Fintech Week

Quoted, Crowdfund Insider

March 10, 2019

Are STOs (Security Token Offering) the new ICOs (Initial Coin Offerings)...and all the Hype!

Panelist, FinTech Week Tel Aviv

March 4, 2019

Will Crypto ICO Creators Get Any Do-Over Second Chance Mulligan With The SEC ForCompliance?

Contributor, Bitcoin Exchange Guide

February 21, 2019

The SEC's "Get Out of Jail Free Card" (Kind Of)

Quoted, Forbes

February 20, 2019

Polsinelli Shareholder Jason A. Nagi to Host BitAngels Round Table

November 29, 2018

Polsinelli Shareholder Jason A. Nagi to Moderate at Block FS

Moderator

November 29, 2018

Digital Assets and the Long-Arm of the Law

Author, Polsinelli BitBlog

November 9, 2018

Guest Post: The First Federal Court Hearing on SEC Jurisdiction over ICOs

The D&O Diary

Featured in The D&O Diary

May 10, 2018

Ruling On What Isn't A Security Needed For ICO Clarity

Law360

May 9, 2018

Blockchain, Bitcoin & Cryptocurrency: Regulation, Enforcement & Litigation

Panel Speaker

New York City Bar

6th Annual Securities Litigation & Enforcement Institute

March 14, 2018

Blockchain: Coming to a CMBS Near You

March 12, 2018

Polsinelli Shareholder Jason Nagi to present at FinTech Week Tel Aviv

Co-Presenter, FinTech Week Tel Aviv

March 5, 2018

The Dark Side of Crypto - Fraud in Blockchain Crowd Sales and Beyond

New York White Collar Crime Tech

Speaker

March 1, 2018

Outcomes in Single Asset Real Estate Chapter 11 Cases

Journal of Bankruptcy Law

February/March 2018

Polsinelli Shareholder Jason A. Nagi to Present at FinTech World Workshop Series

February 7, 2018

Feds start to crack down on fraud as Bitcoin soars

CNN Tech

December 9, 2017

The Future of Blockchain Adoption and Digital Asset Regulation at Blockchain for Wall Street

Featured in investFeed Edge article

November 20, 2017

Legal and Regulatory Considerations for Blockchain Apps, Cryptoassets and ICOs

Blockchain for Wall Street Conference; New York City

November 14, 2017

Are ICOs risky business? Wild West of Finance; Wall Street Blockchain; Functionality;Integration and Security

Moderator, The Rise of Blockchain Digital Money 2017 - FinTech World Workshop Series; Washington, D.C.

November 6, 2017

U.S. Regulators Enter the FinTech Sandbox

July 2017

Regulatory Landscape of Digital Money

Moderator, The State of Digital Money; Los Angeles, CA

July 22, 2017

Special Report Reveals Outcomes in Single Asset Real Estate Chapter 11 Cases

June 2017

A Remedy for Lost Notes

June 23,. 2016

Make-Whole and No-Call Provisions - Caveat Lender

Business Workouts Manual, 2015-2016 Edition

2015-2016

Workout Litigation- What a General Counsel Needs to Know, Session Chair

Real Estate General Counsel Forum

December 2012

Examining the Foreclosure & Bankruptcy Process, Session Chair

The Bankers Forum on Distressed Properties & Real Estate Loan Workouts

April 2010

Secured Creditors Are Not Entitled to Credit-Bid in a Sale Through a Reorganization Plan

ABI Asset Sales Committee Newsletter, Volume 7, Number 2

March 2010

Section 365 of the Bankruptcy Code: When the Words Get in the Way

105 Com. L.J. 413 (2001)

2001

Upcoming EventsWebinar: How to Survive an SEC Investigation or Enforcement Action

Tuesday, March 17

real people.

Areas of Focus

Financial Regulatory Enforcement

Financial and Securities Litigation

Government Investigations

Internal Investigations

Corporate Directors & Officers Liability

Litigation

Class Action and Multidistrict Litigation

Commercial Litigation

Litigation and Dispute Resolution


Regulation

Education

J.D., University of Connecticut School of

Law

B.S., St. Joseph's University, Pa.

Bar Jurisdictions

Arizona

Connecticut

Court Admissions

U.S. District Court, District of Connecticut

U.S. Court of Appeals, Second Circuit

U.S. District Court, District of Arizona

U.S. Court of Appeals, Ninth Circuit

U.S. District Court, District of Colorado

United States Supreme Court

real perspective.SM

Paul J. Roshka, [email protected]

OverviewKnown for his thorough preparation and persistence, Paul Roshka has a national practice

representing companies, their directors, officers, and employees during investigations and

enforcement/disciplinary proceedings involving potential violations of the federal and state

securities laws, and other financial regulatory statutes and rules. He has handled matters initiated

by virtually every SEC Regional Office and FINRA District Office, and their Home Offices in

Washington, D.C.

He is also a recognized bet-the-company litigator. Paul has defended securities/financial claims in

federal and state court, including class action defense. He is a seasoned litigator trusted to resolve

our clients’ disputes. Paul and the lawyers he supervises know it is important to keep clients

informed, and provide value for the services they render. He handles arbitrations and mediations

nationwide. He is also a AAA arbitrator and serves as a mediator is cases involving claims of

securities violations and complex issues in the real estate, insurance, mortgage and banking

industries.

Paul’s passion for resolving complex disputes is equally matched by his passion for positively

impacting his community. He has spearheaded numerous significant charitable efforts that have

directly and positively impacted the lives of thousands of Arizona children and families. During

Paul’s three year term as Chairman of Phoenix Children’s Hospital’s Board of Directors, he led the

effort to move the young Hospital from two floors of an existing health care provider to its own

free-standing campus. Working with bond counsel and underwriters for the offering, and as a

member of the Capital Campaign Committee, Paul helped the Hospital raise the funds to

purchase and renovate an existing hospital on 26 acres in central Phoenix. Today Phoenix

Children’s Hospital has six Centers of Excellence, nearly 1000 specialists, and provides outpatient,

trauma, and emergency care across more than 75 subspecialties. Children and their families no

longer have to travel to hospitals in other states to receive world class health care.

Paul reorganized Phoenix Children’s Hospital’s Foundation’s Board of Directors and served six

terms as the Foundation’s Chair. He has chaired Phoenix Suns Charities, the Children’s Cancer

Center, the Phoenix Zoo’s Wildest Club in Town, and the Wildest Ball in Town. Paul has been on

the Boards of the Salvation Army, Xavier College Preparatory School, and Southwest Human

Development which is the Arizona Easter Seals affiliate and an organization that seeks through its

40 programs to create a positive future for every child.

He received KPNX TV’s 12 Who Care Hon Kachina Award and the Jefferson Award from the

American Institute for Public Service for his commitment to the Children’s Cancer Center at

Phoenix Children’s Hospital.

Distinctions

Recognized by The Best Lawyers in America as the 2016 SEC Defense "Lawyer of the Year"

in Phoenix, Arizona

Recognized by The Best Lawyers in America as the 2013 Securities Litigation "Lawyer of

the Year" in Phoenix, Arizona

Selected for inclusion in The Best Lawyers in America in the fields of:

Bet-the-Company Litigation, 2003-2020

Commercial Litigation, 2003-2020

Litigation - Regulatory Enforcement (SEC, Telecom, Energy), 2003-2020

Litigation - Securities, 2003-2020

Arizona's Finest Lawyers: Business Litigation, 2006-2020

Selected by Arizona Business magazine as a Leader in Law – Securities & Finance, 2018

AV Preeminent Rating, Martindale-Hubbell

Selected for inclusion in Super Lawyers Top 50 Lawyers in Arizona, 2012-2014

Selected for inclusion in Super Lawyers, Securities Litigation, Business Litigation, 2007-2020

Selected by AZ Business magazine as one of Arizona's Top 100 Lawyers, 2015, 2016

AZ Business magazine's Top Lawyers, ADR, 2014

Arizona State University

Served as an Adjunct Professor at Arizona State University teaching courses on White

Collar Crime, Organized Crime, and Corporate Crime

MembershipsState Bar of Arizona

Alternative Dispute Resolution Section

Securities Regulation and Trial Practice Section

State Bar of Connecticut

American Bar Association

Business Law Section

Law Practice Management Section

Litigation and Health Law Section

Maricopa County Bar Association

Securities Industry and Financial Markets Association (SIFMA)

Compliance and Legal Society

Arizona Chamber of Commerce and Industry

Legal, Regulatory and Financial Services Committee

Key MattersRepresented the board of directors of a religious-based affinity foundation. The

representation involved resolving the regulatory concerns of the SEC, the Arizona

Corporation Commission (ACC) and other State securities regulators while working with the

foundation’s board to preserve funds invested in this $560 million Ponzi scheme.

Represented the former president of a mortgage banker and its affiliated securities arm during

a joint SEC and ACC investigation regarding the entity’s sale of over $500 million in

investments.

Defended the former CFO of a public company during an internal corporate investigation, the

SEC investigation and the enforcement action filed against our client alleging accounting

irregularities to inflate financial results and overstate net income in violation of the antifraud

provision of the Securities Act and the antifraud and books and records provisions of the

Exchange Act.

Defended the president of an international firm in an investigation and enforcement

proceeding brought by the ACC involving allegations concerning unregistered securities and

®

®

®

securities fraud arising out of the sale in Arizona of approximately $25 million of universal

leases relating to interests in Cancun hotels.

Defended an investment adviser in an SEC investigation and proceeding alleging

misrepresentation of investment risks and failing to disclose a side compensation agreement

involving a $10 million investment pool in violation of the Securities Act, the Exchange Act

and the Advisers Act.

Represented a former vice president of investor relations for a public company during an SEC

investigation involving concerns of insider trading.

Represented the former president of a trust company during an investigation conducted by

the SEC and the New York Attorney General’s Office involving allegations of late trading of

mutual funds.

Represented numerous firms and registered representatives in investigations and proceedings

brought by FINRA charging violations of its rules concerning suitability, supervisory

deficiencies, unauthorized transactions, misrepresentations and conduct inconsistent with just

and equitable principles of trade.

Obtained dismissal with prejudice in a securities fraud complaint filed in the United States

District Court in Arizona against a former CEO brought by 117 plaintiffs who invested more

than $20 million.

Defended a securities fraud class action and a derivative lawsuit filed in the United States

District Court in Arizona that named Chief Financial Officer of public auto-parts company.

Defended numerous broker-dealers and registered representatives in a FINRA arbitrations in

Arizona, California, Florida, Washington, Minnesota, Utah, Missouri and Texas alleging

misrepresentations, unauthorized transactions, unsuitable recommendations and churning.

Represented an investment advisory firm and one of its principals during an SEC

investigation into the firm’s options trading strategy, and in defense of two arbitrations filed by

a combined total of 30 clients seeking $12 million in damages. The SEC did not file charges.

The claims against our clients settled for approximately $125,000.

Participated with other Polsinelli lawyers in the representation of an insurance agency and

five of its agents during investigations conducted by the SEC and the Arizona Securities

Division, and the proceedings these agencies filed against our clients for their alleged role in

placing $17 million of notes issued by a $1.2 billion Ponzi scheme.

Represented an individual who invested $1.1 million in a business touting the harvesting of

spiny lobsters for sale in China. The accounting records showed the money was used for the

promoters’ personal expenses including the lease of two Mercedes Benz and a Range Rover.

The two LLCs and three individuals behind the scheme settled the case favorably for our

client.

Participated with other Polsinelli lawyers in the representation of an investment adviser who

was forced to leave his firm by his partner. The AAA arbitration resulted in an award in favor

of our client in excess of the $1 million sought for the buyout of his partnership interest,

pre-judgment interest, post-judgment interest, and attorney’s fees and costs.

As part of the team of Polsinelli lawyers who have a FinTech practice, represent companies,

their principals, and employees in the crypto currency industry during investigations by the

SEC and the CFTC.

Represented a registered representative in a FINRA arbitration against allegations of fraud,

misrepresentations and non-disclosures, elder abuse, breach of fiduciary duty, and suitability.

The claims were denied in their entirety. After the hearing regarding expungement of the

claims from the representative’s BrokerCheck and CRD, the arbitrator found the allegations

were false and granted the request for their expungement.


March 17, 2020



February 27, 2020

Prosecutors Not Required to Prove Tipper Received “Personal Benefit” to be Convicted UnderCriminal Insider Trading Statute

January 2020

SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval


October 11, 2018

Court Denies Defendants' Motion to Dismiss in Commodity Fraud Case Involving the VirtualCurrency My Big Coin


October 11, 2018

M&A Litigation Series: Stockholder Claims

March 22, 2016

CLE Presentations

Navigating the Credit Crisis: What Every Litigator and Corporate Counsel Needs to Know About Representing

Clients in an Uncertain World, Arizona State Bar

Best Practices in Securities Arbitrations and Enforcement Priorities at the Securities and Exchange

Commission, Arizona State Bar

The Mechanics and Pitfalls of Representing Businesses and Individuals Before Administrative Agencies,

Arizona State Bar

Conducting Internal Investigations: How to Identify and Prevent Corporate Liability, Arizona State Bar

Civil RICO, Maricopa County Bar Association

Dealing With The Regulators – SEC, NASD and the State, Arizona State Bar

Anatomy of a State Enforcement Action, Arizona State Bar

Securities Fraud: Protecting the Rights of the Victim, Defending the Rights of the Accused, Maricopa County

Bar Association

Recent Developments in Securities Litigation, Arbitration and Enforcement, Arizona State Bar

Mediation Seminar, joint State Bar and NASD Regulation, Inc.

The Bulls, the Bears and the Sidewinders, Arizona State Bar

Administrative & Criminal Prosecution of Securities Fraud Cases, Maricopa County Bar Association

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Upcoming EventsWebinar: How to Survive an SEC Investigation or Enforcement Action

Tuesday, March 17

something wicked this way comes: how to survive an sec ...5 sec investigations the sec is the...

Documents