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Private Placements 101

A private placement, also sometimes known as an unregistered offering, is a way for companies to raise money from investors without having to conduct a public offering. 

Sources: U.S. Securities and Exchange Commission, Indiana Secretary of State What is a private placement? A private placement, also sometimes known as an unregistered offering, is a way for companies to raise money from investors without having to conduct a public offering.  Many of the companies that raise money this way are privately held startups.  Private placements are not subject to some of the disclosure requirements and other regulations that public offering are. Who can invest? Generally, private placements are restricted to accredited investors.  Accredited investors are individuals who meet one of two criteria:  they earned more than $200,000 (or $300,00 together with a...

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Former Indianapolis payroll exec pleads guilty in $9.4M fraud scheme

An Indianapolis man who operated a downtown payroll services business pleaded guilty to federal charges Friday after admitting to conducting a fraud scheme that cost his clients and Internal Revenue Service more than $9.4 million, the U.S. Attorney’s Office announced.

By Indianapolis Business Journal Staff An Indianapolis man who operated a downtown payroll services business pleaded guilty to federal charges Friday after admitting to conducting a fraud scheme that cost his clients and Internal Revenue Service more than $9.4 million, the U.S. Attorney’s Office announced. David Downey, 50, who ran Time Payroll from 2009 to 2017, faces a possible prison sentence of six years, plus fines of up to $750,000. He also could be ordered to pay restitution to his clients and the IRS. U.S. District Judge Catherine Perry scheduled sentencing for Dec. 13. Downey, who had clients in Indiana, Illinois, Kentucky and...

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Indiana family files lawsuit against e-cigarette manufacturer

Indiana family files lawsuit against e-cigarette manufacturer

By Sandra Chapman of WTHR 13 in Indianapolis A Carmel, Indiana family is taking on one of the largest e-cigarette manufacturers in the country. In a federal lawsuit filed in Indiana, Tom McCullogh said high levels of nicotine and youth-centered marketing caused his son to become addicted and is behind a growing crisis in central Indiana. In the 18-page lawsuit, McCollough said his son began "juuling" at the age of 15 and quickly became addicted to Juul e-cigarette products. According to the lawsuit, Juul creates flavors to appeal to teens and has had a marked effect on underage vapers. In addition, the suit alleges...

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Bishop Timothy L. Doherty’s statement on Father David Hasser

Bishop Timothy L. Doherty’s statement on Father David Hasser

NOTE: Andrew Miller is a partner at Starr Austen & Miller LLP. Mr. Miller’s client received a $225,000 settlement paid by the Diocese of Lafayette-in-Indiana to resolve her claims of sexual assault and harassment by Fr. David Hasser, a Diocesan priest and its Director of Vocations. Mr. Miller was able to negotiate the settlement with the Diocese of Lafayette-in-Indiana prior to filing a lawsuit. As an additional condition of settlement, Mr. Miller and his client insisted that the Diocese publicly acknowledge Fr. Hasser’s conduct and also that it retract its prior statement announcing Fr. Hasser’s departure from his position as...

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SEC’s Self-Report Project Nabs $125M In Deals With 79 Firms

SEC's Self-Report Project Nabs $125M In Deals With 79 Firms

By Rachel Graf of Law360.com Seventy-nine investment advisers that self-reported steering clients to funds with relatively high fees have agreed to repay investors about $125 million, but will avoid additional fines under a U.S. Securities and Exchange Commission initiative announced last year. Investment advisers including Deutsche Bank Securities Inc., Wells Fargo Clearing Services LLC and RBC Capital Markets LLC settled the SEC’s claims that they recommended mutual fund share classes with recurring fees over lower-cost options, the agency announced Monday. The SEC said these recommendations created a conflict of interest since the investment advisers benefited from the fees. The advisers didn’t disclose these...

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FINRA’s Recent Enforcement Actions Pack A Hard Punch

Based on an analysis of FINRA’s monthly disciplinary reports, press releases and online database, the fines reported by FINRA in 2018 increased slightly to $68 million from $65 million in 2017, a 5 percent jump, yet were down significantly (61 percent) from the record-setting fines of $176 million in 2016.

By Brian Rubin, Adam Pollet, Rebekah Runyon and Gregory Amoroso for Law360.com A review of the disciplinary actions brought by the Financial Industry Regulatory Authority in 2018 shows that the amount of fines ordered by FINRA increased compared with 2017. However, FINRA also brought fewer actions and ordered decreased restitution. Fines, Restitution and Disciplinary Actions Based on an analysis of FINRA’s monthly disciplinary reports, press releases and online database, the fines reported by FINRA in 2018 increased slightly to $68 million from $65 million in 2017, a 5 percent jump, yet were down significantly (61 percent) from the record-setting fines of $176 million in 2016. Additionally, the fines...

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Indiana Secretary of State Fines LPL Financial (Linsco Private Ledger) $450,000 for Failing to Supervise Its Indiana Brokers

Indiana Secretary of State Fines LPL Financial (Linsco Private Ledger) $450,000 for Failing to Supervise Its Indiana Brokers

Written by Scott L. Starr December 3, 2018 The securities industry is designed so that the first line of defense against fraud is the requirement that a brokerage firm must police its own brokers. A principal rule in the securities industry is that brokerage firms are required to supervise each of its broker’s offices. LPL Financial has recently agreed to pay a civil penalty of $450,000 for “various deficiencies” related to the supervision of its Indiana brokers, the Indiana Secretary of State’s Office recently reported.  In addition to the payment of this civil penalty, Linsco Private Ledger agreed to conduct a third party...

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SEC issues warning about self-directed IRA fraud

SEC issues warning about self-directed IRA fraud

by ConsumerAffairs.com As hand-wringing over dwindling pension trust funds and economic security continues to grow, many people are looking for ways to pump up their nest eggs. One investment angle that many consumers are working are self-directed Individual Retirement Accounts (IRAs). However, the Securities and Exchange Commission (SEC) is raising red flags about the risk vs. reward of that and other investment paths. A self-directed IRA is an IRA held by a custodian that allows investment in a broader set of assets than permitted by most IRA custodians. There’s a danger zone in that scheme because custodians for self-directed IRAs can abandon most...

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How criminals steal $37 billion a year from America’s elderly

How criminals steal $37 billion a year from America's elderly

By Bloomberg News Marjorie Jones trusted the man who called to tell her she'd won a sweepstakes prize, saying she could collect the winnings once she paid the taxes and fees. After she wired the first payment, he and other callers kept adding conditions to convince her to send more money. As the scheme progressed, Ms. Jones, who was legally blind and lived alone in a two-story house in Moss Bluff, La., depleted her savings, took out a reverse mortgage and cashed in a life insurance policy. She didn't tell her family, not even the sister who lived next door. Scammers often push...

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Beware of Annuity Exchanges!

Beware of Annuity Exchanges

by Scott Starr Annuities are some of the highest commission products available for an insurance agent or a stockbroker to sell.  Many times, annuities are more beneficial for the salesman than they are for the client.  That is because in addition to the hefty commissions the stockbroker or insurance agent earns for selling these investments, the annuities themselves frequently have very high expense ratios which come off the top before an owner receives any benefit.  Furthermore, annuities are typically extremely illiquid meaning that they are very difficult to get out of or cash in without paying a hefty penalty.  Because of...

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