Id. ¶¶ 30-37, 40-45, 71-77. [9] Id. ¶¶ 78-83 (citing 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5).[10]Id. ¶¶ 84-89 (citing 15 U.S.C. §77q(a); 15 U.S.C. § 77o(b)). [11]Id. ¶¶ 90-95 (citing 15 U.S.C. §78i(a)(2)).

is an investment contract, and therefore a security. Accordingly, the SEC claims that Garlinghouse and Larsen violated Section 5 by offering and selling their XRP into the public market without first registering those offers and sales, and that they aided and abetted Ripple’s violations as well.To prevail, the SEC will need to show that XRP is an investment contract under the Howey test. See SEC v. W.J. Howey Co., 328 U.S. 293, 298–99 (1946) (holding that an “investment contract . . . means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of a promoter or a third party. . .”). In order to prove its allegations that Garlinghouse and Larsen aided and abetted Ripple in offering or selling unregistered securities, the SEC must show that they knew or recklessly disregarded that Ripple’s offerings and sales of XRP required registration as securities and that those transactions were improper. See 15 U.S.C. § 77o(b).In March 2022, the Southern District of New York charged defendants Ethan Nguyen and Andre Llacuna with violations of conspiracy to commit wire fraud and conspiracy to commit money laundering. The defendants were arrested in Los Angeles, California in connection with this “rug-pull” scheme.In January 2022, the Department of Homeland Security Investigations and the Office of Internal Revenue Service, Criminal Investigation Division (the “Government”) began investigating an NFT fraud scheme after purchasers of a particular NFT publicly reported that they had been defrauded in what is colloquially referred to as a “rug pull.” As the term suggests, a “rug pull” refers to a scenario where the creator of a NFT and/or gaming project solicits investments and then abruptly abandons a project and fraudulently retains the project investors’ funds.As alleged in the Complaint, the defendants created an NFT project advertised under the name “Frosties,” which sold NFTs in the form of various cartoon

directed or targeted to a particular investor.The Ninth Circuit’s holding highlights the risk that investment companies and their advisers face if they promote or otherwise discuss the merits of securities offerings online.Defendant Grant Cardone founded Cardone Capital, LLC, which managed Cardone Equity Fund V, LLC and Cardone Equity Fund VI, LLC (collectively, the “Funds”). The Funds invested in real estate assets throughout the United States by raising millions of dollars in crowdfunding using social media.Plaintiff Luis Pino invested in the Funds and filed a class action in the United States District Court for the Central District of California against Cardone, Cardone Capital, and the Funds asserting that they violated Section 12(a)(2) of the Act by soliciting investment in the Funds on Instagram and on YouTube postings that contained materially misleading statements and omissions.Pino also brought a claim for secondary “controlling person” liability under Section 15 of the Act, 15 U.S.C. § 77o(a), against Cardone and Cardone Capital.Defendants Cardone and Cardone Capital moved to dismiss the claims against them contending that they did not qualify as statutory “sellers” under Section 12(a)(2) because they did not directly solicit Pino’s investment.The district court granted the motion and dismissed the complaint.Pino appealed to the Ninth Circuit, which reversed the dismissal of the claims against Cardone and Cardone Capital.Addressing an issue of first impression, the Ninth Circuit held that “indirect, mass communications to potential investors through social media posts and online videos” qualify as “solicitations” sufficient to allow the imposition of Section 12(a)(2) liability.Cardone and Cardone Capital qualified as “sellers” under the United States Supreme Court’s decision in Pinter v. Dahl, 486 U.S. 622 (1988), which extends liability “to the person who successfully solicits the purchase, motivated at least in part by a desire to serve his own financial interests or tho

Appellants were individual investors who purchased shares of the BlackRock iShares Exchange-Traded Fund (ETF) and suffered financial losses when the market experienced a “flash crash” on August 24, 2015 that resulted in appellants’ “stop-loss” orders being filled at lower prices. They asserted claims for violations of Sections 11 (15 U.S.C. § 77k), 12(a)(2) (15 U.S.C. § 77l(a)(2)) and 15 (15 U.S.C. § 77o) of the 1933 Act against iShares, an investment company under the ICA, as well as iShares’ various controlling agents.More specifically, appellants alleged that iShares knowingly failed to disclose the increased inherent risks of using stop loss orders with ETFs. Stop-loss orders provide a mechanism for investors to limit their loss on a particular position by requiring that the investor’s security be bought or sold when the stock value hits a certain price, at which point it automatically is converted to a market order to be executed at market price.

Appellants were individual investors who purchased shares of the BlackRock iShares Exchange-Traded Fund (ETF) and suffered financial losses when the market experienced a “flash crash” on August 24, 2015 that resulted in appellants’ “stop-loss” orders being filled at lower prices. They asserted claims for violations of Sections 11 (15 U.S.C. § 77k), 12(a)(2) (15 U.S.C. § 77l(a)(2)) and 15 (15 U.S.C. § 77o) of the 1933 Act against iShares, an investment company under the ICA, as well as iShares’ various controlling agents.More specifically, appellants alleged that iShares knowingly failed to disclose the increased inherent risks of using stop loss orders with ETFs. Stop-loss orders provide a mechanism for investors to limit their loss on a particular position by requiring that the investor’s security be bought or sold when the stock value hits a certain price, at which point it automatically is converted to a market order to be executed at market price.

In addition, the court said that providing brokerage services to a market manipulator if done with requisite knowledge could be deemed to assist the manipulator in violation of federal securities laws. (Click here to access 15 U.S.C. §77o(b) and here to access 15 U.S.C. §78i(a)(2).) (Click here for background on the SEC’s enforcement action against the LEK Defendants in the article “US Broker-Dealer, Its CEO and a Non-US Client Sued by SEC for Layering and Other Manipulative Schemes” in the March 12, 2017 edition of Bridging the Week.)

He then said that there was no evidence before him (this was a ruling on a motion for summary judgment so the factual record was well developed) that those two defendants had solicited the Plaintiffs;' investments and dismissed the primary liability claims made against them.Secondary LiabilityThere is little precedent in North Carolina interpreting the "control person" standard of the NCSA. Judge Bledsoe therefore looked to the abundant federal authority under "analagous federal control person liability statutes" like 15 U.S.C. §77o, to determine whether Lackey and Saldarini could be secondarily liable under the NCSA. Op.

Plaintiffs brought a class action against Prosper, its officers and its outside directors after suffering losses from purchasing nonexempt, unqualified, and unregistered loan notes through Prosper, alleging violations of state and federal securities laws.Three of the seven causes of action were asserted against Prosper’s outside directors. Plaintiffs alleged that the outside directors violated two different provisions of Section 25504, and Section 15 of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. § 77o. Section 25504 provides, in pertinent part, that the following persons are jointly and severally liable for selling unqualified securities with those who have engaged in an unlawful practice: “Every person who directly or indirectly controls a person liable under Section 25501 or 25503, every partner in a firm so liable, every principal executive officer or director of a corporation so liable . . . unless the other person who is so liable had no knowledge of or reasonable grounds to believe in the existence of the facts by reason of which the liability is alleged to exist.”In the first cause of action against the outside directors, plaintiffs alleged that they were liable under 25504 because through “their executive positions, and/or Board membership . . . these individuals had the power to influence and control and did influence and control, directly or indirectly, the decision-making of the Company.”