Billions of dollars are raised every year through the sale of restricted stock in private offerings.  Generally speaking, these sales take place under a series of SEC rules that are commonly referred to as Regulation D — or Reg D for short.  Rule 500, the first of the Reg D provisions, opens the discussion by noting that although Regulation D provides for the sale of securities that are not registered under the Securities Act of 1933, it does not create an exemption from the anti-fraud prohibitions appearing within the federal securities laws.  In other words, such offerings are exempt from the requirements specifying that newly issued securities must be registered, but the segments of the federal securities laws which prohibit fraud — via outright falsities as well as material omissions — remain applicable.

Jumping ahead to Rule 504, the text of that provision allows for the sale of securities that are not registered, so long as the offering does not exceed $5,000.000.  Rule 506, by contrast, places no limits on the amount of money that can be raised in a private offering.  Setting aside Rule 506(c), which allows for general solicitation, let’s focus on Rule 506(b).  Under that provision, every purchaser must be an accredited investor — or, alternatively, the investor must possess a sufficient level of knowledge and experience in business and financial matters so as to make him capable of evaluating the merits of the offering, together with the attending risks.  Rule 506(b) makes it clear that the purchaser himself need not possess such knowledge and experience.  Along those lines, Rule 506(b) states that this requirement can be satisfied when the investor, acting in conjunction with a purchaser representative, possesses the requisite level of knowledge and experience.  And, per the terms of Rule 506(b), even if the combined level of knowledge and experience attributable to the investor and his purchaser representative do not suffice, this element will nonetheless be deemed to have been satisfied if the issuer maintained a reasonable belief that this test was met.

Over the years, the SEC rules governing the amount of money that can be raised in private offerings have been revised — as have the rules describing the nature of the solicitations that are made.  Throughout this transitional process, however, one point has remained constant.  Specifically, there has never been any doubt as to the application of the anti-fraud provisions.

Speaking in broad, universal terms, the fight against fraud has consistently served as a crucial component of federal securities laws.  On a basic, fundamental level, it seems clear that people from all sectors of society — rich or poor, conservative or liberal — harbor powerful innate instincts that fuel efforts to combat deceitful business practices.  In short, there is an unwavering, widely-held belief that those who intentionally and nefariously engage in fundamentally dishonest schemes must be held accountable.

Our federal securities laws strive to accomplish that objective, but they do not stand alone.  State securities statutes likewise operate so as to provide for investor protection.  In fact, state securities laws frequently exceed the reach of federal legislation.  Among other things, state securities statutes are generally written so as to impose liability on sellers of securities whenever misrepresentations are made.  In that regard, they are unlike the federal statutes that are available to private litigants, the application of which is limited to situations where the seller possessed an intent to deceive.  Framed in more elementary terms, it will often be easier for investors to recover their losses when they rest their allegations upon state, rather than federal, securities laws because liability will arise under state law even if the facts show that the defendant did not act with an intent to deceive.  Evidence establishing a material misrepresentation, standing alone, will suffice.

If you have sustained investment losses stemming from misrepresentations that were made by a stockbroker or a financial adviser, you may fall within the protections offered by both federal and state securities laws.  But, depending on the specific circumstances of your case, strategic considerations may counsel the use of state law.  Consistent with the discussion set forth above, state securities law — to include the Texas Securities Act — can provide for a recovery of investment losses even if the salesperson did not intend to mislead you.  Viewed in that light, the phrase “securities fraud” actually constitutes a misnomer of sorts.  To that end, while discussing state law proceedings, people frequently utilize the phrase “securities fraud” in a loose, colloquial manner so as to reference misrepresentations that were made in connection with a securities transaction, even if there is no evidence establishing an intent to defraud on the broker’s part.

On a practical level, it must be realised that the issue of intent will, in many instances, never be resolved.  Why?  Because most cases are settled, generally with the assistance of a mediator (who goes back and forth between the parties, explaining the strengths and weaknesses of the various arguments).  When a settlement agreement is finally signed, the terms of the document will specify the amount of money that is to be paid by the defendant; and in all likelihood, it will also feature an express denial of wrongdoing.  (Note: In many instances, people who adamantly believe that they have been victimized by an egregious fraud may question the inclusion of such language.  But, “at the end of the day,” they will invariably abandon their reservations upon learning that a contract containing such verbiage constitutes a standard part of the dispute resolution process.)  In any event, these dynamics customarily result in a situation wherein cases are resolved without any findings of fact ever being made concerning the issue of whether the financial adviser who made the misstatement at issue actually possessed an intent to mislead the buyer.  Nonetheless, the more expansive reach of state securities statutes must still play an important role on a strategic level.  Why?  In many respects, the crucial inquiry will not focus on whether a settlement is reached; it will instead turn on the percentage of the losses that are actually recovered in connection with the settlement.  Suffice to say, a settlement that results in a recovery of 99% of the losses that were sustained is far-removed from a settlement that provides for payment of a nominal sum.  And, keeping those factors in mind, there is no doubt that a defendant who recognizes that his conduct falls well within the net cast by a given statute will ordinarily sense a need to pay out a much larger settlement sum.  Accordingly, taking all pertinent considerations into account, it can hardly be doubted that investors who have suffered losses stand to benefit from the more expansive character of state securities laws.

Investors who wish to better understand their rights should contact a securities law attorney so as to discuss the manner in which state and federal securities laws may apply to the specific facts and circumstances of their case.  Chris Bebel is a securities lawyer who stands out among the crowd.  In many respects, his knowledge, skill, experience, and accomplishments make him uniquely qualified.  Among other things, he earned an LL.M. (Securities Regulation) from Georgetown Law School.  Plus, he previously served as an SEC attorney, Washington, D.C.  Upon departing from the SEC, Mr. Bebel became a federal prosecutor.  During his tenure with the U.S. Department of Justice, he pursued a range of challenging, high profile cases.  There can be no doubt that the intense battles he fought in the courtroom while acting as a public servant constitute an invaluable component of his overall background; he gained tremendous experience while “fighting the good fight.”  When Chris Bebel ultimately left the Department of Justice, the U.S. Solicitor General’s Office pressed him to serve as a Special Assistant U.S. Attorney; and the Justice Department thereafter retained him as a securities fraud expert.  Attorneys from coast-to-coast likewise retained Mr. Bebel as an expert — and thereby manifested a high level of appreciation for his unique blend of knowledge, skill, experience, and accomplishments.

Inasmuch as trial lawyers are frequently burdened with a challenging assortment of tasks and deadlines prior to the time at which a trial commences, it is comforting to know that Chris Bebel does not work alone.  He works in conjunction with other lawyers at Tefteller Law, PLLC.  Moreover, clients benefit greatly from the fact that Chris Bebel works closely with Bradley Ellison, a superb paralegal who possesses stellar intellectual qualities, as demonstrated by the three graduate degrees he has earned.  Further, based on the invaluable training he received in the military (U.S. Air Force), Mr. Ellison consistently exceeds expectations on a logistical and organizational level.  Most importantly, Mr. Ellison pours his heart and soul into the securities fraud cases in which he is involved.  It goes without saying that Texas investors who become clients of the firm will almost certainly derive hefty benefits from the dedication and commitment he “brings to the table” on a daily basis.

The application of common sense shows that those who have sustained a loss in the financial markets based on an outrageous scheme permeated with deceit will ordinarily develop “hard feelings” toward the entities and individuals who are responsible for the money that has been lost.  At the same time, it must be acknowledged that the size of the losses cannot be tied to the state of mind the defendant possessed.  Stated otherwise, the amount of money that may be lost in connection with a given securities transaction remains the same without regard to whether the seller acted fraudulently, as opposed to negligently.  Under both scenarios, however, investors stand to benefit by consulting an experienced investment fraud attorney.  While considering different attorneys, investors must constantly be mindful of the fact that the attributes and qualifications of securities lawyers can be vastly different; some may have dedicated the bulk of their time to the preparation of private offering documents — whereas others have repeatedly devoted their energies toward ferreting out deception and deceit.  Needless to say, investors can best advance their interests by retaining an attorney with a background that suits their needs.

In recent years, Chris Bebel has maintained a special focus on private placement fraud, which may also be referred to as private offering fraud.  Nonetheless, his background is hardly confined to that area.  For more than 30 years he has served as a securities litigation attorney, wherein he has geared his practice toward numerous types of financial adviser fraud cases.  In the process, he has earned a wide assortment of accolades, and he has developed an excellent reputation.

Regardless of whether you believe your losses stem from intentional fraud, recklessness, or negligence, it is in your interest to discuss your case with a prominent, well-known investment fraud lawyer.  Give Chris Bebel a call.  He is a securities lawyer with a track record of success.  Other securities lawyers hold him in high regard, as shown by the numerous occasions wherein they have called upon him for his expertise, knowledge, skill, and accomplishments.  Of course, Chris Bebel cannot guarantee success.  No reputable attorney would extend an absolute promise of success.  On a similar note, Chris Bebel cannot promise anyone that he will accept a particular case prior to the time at which the surrounding details are analyzed.  Over the years, Chris Bebel has declined scores of cases.  If you wish to discuss the merits of your case, give Chris Bebel a call.  No charges are assessed for initial consultations.  Initial consultations are free.

Stand up for your rights.  The impact of stock broker fraud can be overwhelming on both a financial and an emotional level.  Chris Bebel has helped others who have sustained significant losses pursuant to private offering fraud.  Texas law is designed to help investors; and not just Texas investors.  If some of the underlying selling activity took place in Texas, investors residing outside of Texas can still take advantage of Texas legal authorities, including the Texas Securities Act, Texas common law fraud principles, and Texas breach of contract cases.