The Lebrecht Group, APLC

The Securities and Exchange Commission is authorized to conduct investigations of possible violations of the federal securities laws, which provide that “any member of the Commission or any officer designated by it is empowered to administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, correspondence, memoranda, or other records which the Commission deems relevant or material to the inquiry.”  Section 21(b) of the Securities Exchange Act of 1934, 15 U.S.C. 78u(b). 

On August 5, 2009, in a speech before the New York City Bar, Robert Khuzami, the Director of the Division of Enforcement for the SEC, announced that the Commission has approved an order that delegates to him the authority to issue formal orders of investigation, with their accompanying subpoena power.  He also announced that he, in turn, will delegate that authority to senior officers throughout the Division (i.e.; to the regional offices). 

           This is the first in a series of brief articles exploring different exit strategies - ways of monetizing ownership in a company - that are available to affiliate shareholders of private corporations.  Other exit strategies I intend to examine include liquidation, acquisition/merger, and going public.  An affiliate of a company is a person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with, such company.[i]  Common affiliates include directors, executive officers, and greater than 10% shareholders of a corporation. While the presence of any one of these relationships may be sufficient to confer affiliate status on the person bearing such relationship to the corporation, we frequently see companies with individuals who wear all three hats.  Affiliate shareholders must tread carefully when devising and executing an exit strategy because different rules typically apply to affiliate shareholders.  One such exit strategy is called “milking” the business.

Update 

            Seven former SEC Chairs, namely Arthur Levitt, Rod Hills, William Donaldson, Harvey Pitt, and David Ruder, filed an amicus brief in this case asking the Court to uphold the constitutionality of the PCAOB.

             Oral arguments are set to be heard on December 7, 2009.

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            On May 18, 2009, the United States Supreme Court agreed to hear Free Enterprise Fund v. PCAOB, a case that challenges the structure of the Public Company Accounting Oversight Board as unconstitutional.  The PCAOB has been called many things, but is it unconstitutional, and if it is, what then?

Finding a qualified securities law attorney is not difficult, if you know where, and how, to look