SEC To Hold Open Meeting to Consider the Elimination of the Prohibition Against General Solicitation and Advertising For Rule 506 and Rule 144A Offerings

The Securities and Exchange Commission will hold an Open Meeting on Wednesday, July 10, 2013 at 10:00 a.m., in the Auditorium, Room L-002. (SEC’s main offices, 100 F Street, NE, Washington, DC.)

The Commission will consider whether to adopt amendments to eliminate the prohibition against general solicitation and general advertising in certain securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act and Rule 144A under the Securities Act, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act.

The Commission will also consider whether to propose amendments to Regulation D, Form D and Rule 156 under the Securities Act. The proposed amendments are intended to enhance the Commission’s ability to evaluate changes in the market and to address the development of practices in Rule 506 offerings.

Finally, the Commission will consider whether to adopt amendments to disqualify securities offerings involving certain “felons and other ‘bad actors’” from reliance on the exemption from Securities Act registration pursuant to Rule 506 as mandated by Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

SEC Litigation Release No. 22742

SEC Litigation Release No. 22742 

July 3, 2013

Securities and Exchange Commission v. Magdalena Tavella, et al.

Civil Action No. 13 CIV 4609 (S.D.N.Y.) 

The Securities and Exchange Commission filed a complaint against 8 Argentine citizens who are alleged to have unlawfully sold millions of shares of Biozoom, Inc. in unregistered transactions. The SEC also secured a TRO, freezing assets held in U.S. securities firms in accounts of the eight defendants and two other Argentine citizens who had Biozoom shares but had not yet sold them. Last week the SEC suspended trading in Biozoom due to concerns that some shareholders may be unlawfully distributing its securities.

The SEC alleges that from March to June 2013, the defendants received more than 20 million shares of Biozoom (formerly Entertainment Art, Inc.) or one-third of the company's total outstanding shares. In a one-month period beginning in May, 8 of the Defendants  sold more than 14 million shares yielding almost $34 million.  $17 million out of the sales proceeds was wired to overseas bank accounts.

According to the SEC's complaint, the Defendants claimed to have acquired the bulk of the shares in March 2013 from Biozoom’s former shareholders who purchased them in private placements that began in 2007. Each of the defendants provided stock purchase agreements between them and the former shareholders purportedly signed by the defendants and those shareholders.