SEC Brings Actions Against Fifteen Unregistered Brokers for Their Participation in an Illegal Offering of Microcap Securities
The SEC charged fifteen individuals with acting as unregistered brokers or aiding-and-abetting such activity in connection with Intertech Solutions, Inc.’s fraudulent and unregistered securities offerings.
The SEC’s complaints allege that the charged individuals were hired by Intertech Solutions to engage in or facilitate cold-call solicitations of hundreds of prospective investors throughout the United States and Canada from at least February 2014 through December 2016. The complaints allege that, as a result of the defendants’ conduct, Intertech Solutions raised over $7 million from retail investors.
According to the complaints, Intertech Solutions paid the defendants exorbitant commissions ranging from 35% to 50% of the funds provided by each investor. The complaints allege that the defendants did not disclose their commission rates to investors and instead distributed private placement memoranda that indicated that only 10% of investor proceeds would be used as commissions. The SEC previously charged Intertech Solutions and its control persons with orchestrating the fraudulent and unregistered offerings.
The SEC’s complaints, filed in federal district courts in Nevada, Texas, and Florida, charge the defendants with either direct or indirect violations of the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934. Twelve of the defendants are also charged with the securities registration and antifraud provisions of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and one defendant is also charged with violating the securities registration provision of Section 5(a) and (c) of the Securities Act.
The complaints appear to rely primarily on the receipt of transaction based compensation for violations of the broker-dealer registration provisions. Other conduct the SEC may rely on include providing information about Intertech Solutions’ business, discussing the valuation of an investment with Intertech Solutions, mailing or emailing offering documents, and directing investors to sign subscription agreements and providing related payment instructions.
Without admitting or denying the SEC’s allegations, eleven of the defendants have agreed to the entry of final judgments. These settlements are subject to court approval. It is important to note that no court has determined the non-settling defendants engaged in unlawful conduct.