The Securities and Exchange Commission is on a winning streak after cracking down on “toxic” lending using a relatively novel legal theory—one that has spooked investment firms leery of being tagged as a securities dealer.
The SEC in recent years has sued numerous people who got shares in penny stock companies at a discount by lending them money. District courts in places like New Jersey, Minnesota, and Florida have sided with the agency and found the lenders illegally acted as unregistered securities dealers.
The SEC’s latest win came last week when the US Court of Appeals for the Eleventh Circuit ...
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