DD Support Board and Research Team

[jurisper]

This SEC complaint from the other day details an interesting angle in the debt conversion/unregistered securities caper.

SEC vs Mark A. Lefkowitz, Compass Capital Group, Inc., Mark A. Lopez, Unico, Inc., Steven R. Peacock, Shane H. Traveller, and Advanced Cell Technology, Inc., United States District Court for the Middle District of Florida, Civil Action No. 8:12-CV-1210T35MAP

http://www.sec.gov/litigation/litreleases/2012/lr22381.htm
http://www.sec.gov/litigation/complaints/2012/comp22381.pdf

A court or govt agency can order exemption from registration for securities issued in satisfaction of claims etc. This is under Sec 3(a)(10) of the 1933 Act.

So an interesting opportunity for the diligent pennyscammer. "Financier" agrees with company to take over some old or new debt; they agree on settlement terms including conversion into common at some fraction of the current market price; go up in front of a judge with the settlement agreement & get a fairly automatic tick for a Sec 3(a)(10) exemption; issue a flood of free-trading common; financier sells into market and kicks back some proportion to the company/management.

Another indication of the SEC doing some good work to whack bogus debt conversion plays.