Say It Again: Private Companies Are Subject to the Federal Securities Laws

It is a point I have made before but it is worth saying again – private companies are not immune from scrutiny under the federal securities laws. In a series of recent enforcement actions – most notably the SEC’s March 2018 enforcement action against Theranos and two of its executives – the SEC has made of point of emphasizing that its regulatory reach extends to private companies. Last week, the SEC announced the resolution of another enforcement action against private company executives. The latest action, involving a failed Silicon Valley start-up, underscores the SEC’s readiness to pursue securities law violations by private company executives.   Background On April 2, 2019, the SEC announced that it has settled an enforcement action the agency brought against the founder and chief executive of Jumio, Inc., a private mobile payments company. In its complaint against the former CEO, Daniel Mattes, the SEC alleged that Mattes…

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