Securities Industry Commentator by Bill Singer Esq

February 27, 2020

Amazon made a bigger camera-spying store -- so we tried to steal its fruit / It's like other Amazon Go stores, only bigger. But it's a meaningful difference. (Ars Technica by Sam Machkovech)
SEC Commissioner Hester Peirce's recently floated an informal proposal for a "safe harbor" to protect token developers from SEC enforcement actions. Peirce's proposal attempts to address the conundrum of how would-be networks can publicly distribute their tokens despite the uncertainty about whether the Howey test might deem cryptocurrencies to be cryptosecurities. Veteran Wall Street lawyer Aegis Frumento finds some merit in the Peirce's efforts but also spots a potential flaw.

Real Estate Ponzi Scheme / Rhode Island Woman's Fraud Preyed on Friends and Neighbors (FBI Release)

Monique Brady, 45, claimed her property preservation company had contracts to rehabilitate New England properties, and that she needed investments of $20,000 to $80,000 to pay subcontractors to perform the work. She promised investors a 50-percent return after the projects were completed. After the $10 million scam ran its course, the trail of devastation was heartbreaking. As noted in part in the FBI article:

A 67-year-old victim with a quadriplegic husband and elderly parents with Alzheimer's and dementia said in a statement to the court that she lost both her life savings and her parents' savings to Brady's ploy.
In a Complaint filed in the United States District Court for the District of New Jersey, the SEC charged John D. Fierro and his company, JDF Capital, Inc.with violating the registration provision of Section 15(a)(1) of the Securities Exchange Act; and further charged Fierro as a control person under Section 20(a) of the Exchange Act for JDF's violations. In part the SEC Release alleges that:

[B]etween January 2015 and November 2017, Fierro and JDF engaged in the business of purchasing convertible notes from penny stock issuers, converting the notes into shares of stock at a large discount from the market price, and selling those newly issued shares into the market at a significant profit. Fierro and JDF allegedly purchased convertible notes from more than 20 separate issuers and sold more than 6.5 billion shares of newly issued penny stock into the market, generating over $2.3 million in profits. As alleged, at the time of this conduct, neither Fierro nor JDF were registered as dealers with the SEC, in violation of the mandatory registration provisions of the federal securities laws. By failing to register, Defendants avoided certain regulatory obligations for dealers that govern their conduct in the marketplace, including regulatory inspections and oversight, financial reporting requirements, and maintaining books and records.

SEC Charges Georgia Businessman with Affinity Fraud Focused On Christian Investors (SEC Release)
In a Complaint filed in the United States District Court for the Northern District of Georgia, the SEC alleged that Dionne Van Zyl violated the antifraud provisions of Sections 206(1), 206(2), 206(4) and Rule 206(4)-8 of the Investment Advisers Act of 1940, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act. As alleged in part in the SEC Release:

[F]rom 2013 to 2019, Van Zyl used his position of trust as a senior Elder at a suburban Atlanta church, and held himself out to fellow church members as having a background in finance and private equity, to form investment advisory relationships with dozens of congregants.  Van Zyl allegedly invested $23.5 million of his clients' funds into his own failing start-up companies and his related investment fund, and also used clients' funds for high-frequency forex trading, without disclosing to investors how he was using their funds or the associated investment risks.  As alleged, Van Zyl also failed to fully disclose his compensation, telling clients only that he could take certain "advisory" and "consulting" fees. While his clients lost most of their investment funds as a result of his trading activities, Van Zyl collected nearly $3 million in undisclosed fees, commissions, and other compensation.
Author Sam Machkovech offers a wonderful piece about Amazon's Go and Go Grocery stores. It's the purported future of "grab-and-go shopping," or so Amazon hopes. If it all comes together, you walk around the store, pick and choose, maybe keep that banana or maybe put it back, maybe buy the organic apple or exchange it for a non-organic one. So . . . does it work? Read Machkovech's report.