Even More on "SEC Brings 'Blue Ribbon' Enforcement Proceeding Against 'Crowdsourcing' Offering"
I continue to get member feedback on my series of blogs about novel ways that companies can market their IPOs. Here's an excerpt from WilmerHale's David Westenberg's book on going public that provides more examples of companies using gimmicks to sell their IPO.
And here's a note from Michael Schley of Larkin Hoffman in Minnesota:
You recently blogged about the James Page Brewing SCOR offering from 1999. I did that deal. I thought you might like a little more info. It was federally exempt under 504 (not Regulation A) and state registered in Minnesota under SCOR. I still think SCOR is underused (see the book I wrote for the state about SCOR and Angel Tax Credit; also see my crowdfunding memo from May, written before the SEC's "Pabst" enforcement action). The brewery put a "stuffer" in their 6-packs in the liquor store coolers. We didn't expect it but a lot of investors bought the Units as Christmas gifts so we closed the deal early so we could get the certificates out timely.
The president of the company was great at marketing. Once he had all these owners/members (close to 1,000 if my memory serves), he sent them all several business cards with information about the brewery, the brands, etc. on one side and a "why don't you serve this great beer" statement on the other side for the investors to hand to restaurants and bars who didn't serve their beer. This led to a lot of bars telling their distributors that they wanted to add it as a tap beer.
SEC Enforcement Actions: Internal Control Violations
This settlement of Labarge with the SEC's Division of Enforcement involves internal controls at a company, prompting a member to ask in our Q&A Forum (#6613): Does anyone know if there have been many of these?
I believe the answer is that there are probably quite a few. This type of result is a convenient mid-point for settlement of cases where the staff thinks there was accounting fraud (or FCPA bribery) but either isn't sure it could prove it or agrees to drop the fraud (or bribery) charge as a reward for cooperation and willingness to settle.
XBRL Snafus: "My Public Float is Bigger Than Yours. A Quadrillion Dollars!"
This blog about XBRL errors by Anne Leslie-Bini is an eye-opener, particularly when its starts off by noting SEC Data Guy founder Ed Hodder has reported that 6 companies have submitted XBRL instance documents in their Q2 10-Q filing that disclosed public floats in the quadrillions of dollars. Sounds like something that Dr. Evil would disclose!
- Broc Romanek