In 1929 when the stock market crashed, a lot of people lost their money and were devastated. So the government stepped in and tried to figure out what happened; they determined that the stock markets at that time were making their own rules, and the disclosures that the companies were giving their investors were not full, complete or accurate. So the government thought, “You know what, we need to make our own requirement about what disclosures are needed,” so they set up a code at that time and also set up an enforcement agency, which is the Securities and Exchange Commission (SEC).
Any time that a company is giving equity in their company to somebody else, meaning stock or membership in their company, they’re in the realm of securities law, and securities attorneys make sure that they help the companies comply with those federal and state laws.
Who Do You Typically Represent In These Cases?
We work with companies; in these cases, it can be anything from LLCs, partnerships to corporations. Any company that is trying to raise money is going to be tiptoeing the line of securities law and needs to make sure that they’re in compliance with that law, but it can be any size company: large or small, private or a public reporting company.
How Can A Lawyer Help Someone With Securities Law Issues?
There are a lot of laws to navigate, when you’re talking about securities law, because there are two layers. There is the federal law that you need to comply with, and then there is your local state law as well. So it is difficult to understand these laws and to know how to implement them, and it’s even difficult for most attorneys. There are not that many securities attorneys. We’re kind of a rare breed, so we delve into these laws all the time and understand how to interpret them and apply them to individual cases.
How Does A Company Know If They Need A Securities Attorney?
If the company is in any way granting any shares or other equity in their company or if they’re trying to raise money, odds are they need a securities attorney, someone to help them know whether they’ve crossed over the line into something that would be looked at by the SEC.
What Are The Potential Consequences Associated With A Breach Of Securities Law?
It’s a really big deal if a company steps over the line and doesn’t do things correctly. Let’s say they’re raising money: they could be forced to pay back that money and they could also be forced to pay 3 times the amount that they raise. So they could have large hefty fines: there could be individual liability for the managers or board of directors of the company, as well as criminal sanctions against those individuals. Also it could get you in trouble with foreign entities. So you need to be really careful when you’re dealing with securities law.
What Expectations Should Someone Have When Dealing With A Securities Attorney?
Something that a lot of clients don’t understand is attorneys are yes-men, but they shouldn’t be yes-men. They should tell you strictly what the law is; they are also not going to tell you whether something is a bad or a good business decision. They will tell you the legal ramifications of the decision and the ups and downs of choosing to go one way or another. It’s important for clients to understand that attorneys are there to help you comply with the law, and they are not going to tell you whether your ideas are good or bad ideas unless the client asks.
What a client should expect from a securities attorney is someone that’s going to be well-versed in securities law that can help them navigate that minefield to make sure that they can raise money or do other things necessary but stay in compliance with federal and state law.
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