SEC Litigation Update: Puerto Rico Company Settles Securities Fraud Allegations
On February 22nd, 2023, the Securities and Exchange Commission (SEC) confirmed that the agency has obtained a final judgment in an investment fraud case against Green Mining, LLC and José Jiménez Cruz. In total, the company and Mr. Jiménez will pay more than $3 million. The case is centered around fraud involving unregistered securities. Here, our Miami investment fraud lawyers discuss the allegations in more detail and highlight the risks associated with unregistered securities.
Background: What are Unregistered Securities?
Broadly stated, unregistered securities are financial instruments that have not been registered with the SEC. Unregistered securities can come in the form of stocks, bonds, and investment contracts offered by private companies or individuals to a select group of investors. These securities are typically not publicly traded and are exempt from the registration requirements that apply to publicly traded securities. Unregistered securities carry higher risks than registered securities.
SEC Settlement: Multi-Million Puerto Rico-Based Securities Fraud Scheme
The SEC initially filed a complaint against Green Mining, LLC, its owner José Jiménez Cruz, and another individual in September of 2021. In its complaint, the federal agency alleged that the company raised more than $2.7 million from investors on fraudulent grounds.
Actual and prospective investors were told that their investment would give them an interest in a gold mining operation in Columbia. In reality, there was no actual, permitted mining operation in the country. Green Mining, LLC never successfully obtained any required permits.
Without admitting to or denying any of the allegations, Green Mining, LLC and José Jiménez Cruz have agreed to resolve the allegations. They will pay nearly $2 million as disgorgement of ill-gotten gains. Additionally, they will pay a collective $1.2 million in civil financial penalties.
Know the Risks Associated With Unregistered Securities
Unregistered securities, also known as “private placements,” can be a tempting investment opportunity for some investors, but they come with significant risks. Here are some of the risks associated with unregistered securities that investors should be aware of:
- Lack of Transparency: Private companies offering unregistered securities do not have to disclose as much information as publicly traded companies. This can make it difficult for investors to accurately evaluate the investment opportunity.
- Illiquidity: Unregistered securities are not publicly traded, so it can be challenging to find buyers or sellers. This means that investors may be unable to sell their securities when needed.
- Limited Oversight: The SEC does not regulate unregistered securities to the same extent that it regulates publicly traded securities
- Potentially Fraudulent Offerings: Unregistered securities are sometimes used in fraudulent schemes, so investors should be especially cautious when evaluating these types of investments.
Get Help From an Unregistered Securities Losses Attorney Today
At Carlson & Associates, P.A., our Miami unregistered securities lawyers are standing by, ready to protect your rights and your financial interests every step of the way. If you suffered losses in unregistered securities, we are available to help. Contact us today to arrange your fully confidential, no strings attached case evaluation. From our law office in Miami, we are well-positioned to handle securities fraud and investment fraud cases arising out of Puerto Rico.
Source:
sec.gov/litigation/litreleases/2023/lr25646.htm