United States: Three media companies settle SEC fees for unregistered stock and digital asset offerings
To print this article, simply register or connect to Mondaq.com.
Three media companies paid the SEC’s fees for conducting offers of unregistered stocks and digital asset securities.
In its order, the SEC said the three companies had solicited investments from thousands of people, including US investors, for an offer of common stock in two of the companies (the “G-Entities”). The SEC found that the G Entities claimed to have created a social media platform to provide media coverage that would be “the only uncensored and independent bridge between China and the Western world.” Further, the SEC determined that Entities G had solicited investments for their offering of digital tokens that the two companies said could be used for transactions on the social media platform.
The SEC determined that the G entities had not yet developed a mechanism for their platform to accept payments through digital tokens. The SEC also found that in their solicitation of investments, the G entities represented the digital token offering as offering significant ROI potential.
The SEC concluded that the G Entities violated Sections 5 (a) (“Sale or delivery after sale of unregistered securities”) and 5 (c) (“Need to file a registration statement”) of the Securities Act .
To pay the fees:
- the three companies have agreed (i) to cease and desist from any future violations and (ii) to comply with the covenants set out in the order;
- the G Entities have agreed to (i) jointly and severally return $ 434,134,141 in investor funds, plus $ 15,776,488 in pre-judgment interest, and (ii) each pay a civil fine of $ 15 million; and
- non-G Entities has agreed to (i) return $ 52,610,922, plus $ 1,911,877 pre-judgment interest, and (ii) a civil fine of $ 5 million.
The G Entities concurrently settled New York Attorney General (“NYAG”) charges that required the companies to pay $ 479.9 million. The NYAG allowed the G Entities to credit the payments they make for the SEC settlement to the NYAG settlement, which will be allocated in return to the relevant investors.
- SEC Press Release: SEC Charges Three Media Companies with Illegal Offers of Shares and Digital Assets
- SEC Order: GTV Media Group, Inc., Saraca Media Group, Inc. and Voice of Guo Media, Inc.
- NYAG Press Release: Attorney General James Raises Nearly Half a Billion Dollars to Solve Illegal Stock and Cryptocurrency Sales
- NYAG Termination Insurance: GTV Media Group, Inc. and Saraca Media Group, Inc
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
POPULAR POSTS ON: US Corporate / Commercial Law