SEC Charges Three Unregistered Dealers with Registration Violations

In a recent development, the Securities and Exchange Commission (SEC) has initiated legal proceedings against Adam R. Long of Dorado, Puerto Rico, along with two companies under his ownership and control. The charges stem from their acquisition and sale of nearly 6 billion shares of microcap stock without registering as securities dealers with the SEC.

The SEC’s complaint alleges that from at least November 2018 to August 2021, Long and his companies, namely L2 Capital LLC and Oasis Capital LLC, systematically engaged in the business of procuring convertible notes from microcap issuers. Subsequently, these notes were converted into shares of stock at a substantial discount from the prevailing market price. The newly issued shares were then sold into the market at a substantial profit. During this period, it is estimated that Long and his companies reaped profits exceeding $20 million from the sale of nearly six billion newly issued microcap stock shares. Crucially, at the time of these activities, the Defendants were not registered with the SEC as dealers, a violation of the mandatory registration requirements stipulated in federal securities laws.

The SEC’s complaint underscores that by evading registration, the Defendants circumvented various regulatory obligations typically binding on dealers. These obligations include regulatory oversight, compliance with financial reporting requirements, and maintaining essential books and records.

The SEC’s complaint has been filed in federal court in the U.S. District Court for the Northern District of Illinois. The charges brought against the Defendants pertain to the violation of the dealer registration provisions outlined in Section 15(a)(1) of the Securities Exchange Act of 1934. Additionally, the complaint alleges control person liability under Section 20(a) of the Exchange Act for Long, concerning the violations committed by L2 Capital and Oasis Capital.

The SEC seeks a range of remedies through this legal action, including permanent injunctions, disgorgement of ill-gotten gains, prejudgment interest on a joint and several basis, civil penalties, and penny stock bars.

If you suspect your advisor mismanaged your money or committed negligence or fraud, call Sonn Law Group for a free consultation at 833-912-3000 today.