The essence of the SEC and DOJ actions against Javice allege that Frank defrauded a large financial institution in connection with the sale of her company by providing false information regarding its number of users. According to the SEC, Javice engineered a scheme to create a fraudulent data set that misrepresented Frank’s customer base as consisting of 4.25 million students – when the actual number was less than 300,000. The SEC further alleged the number of students was a material data point for the $175 million transaction.
The SEC’s decision to charge a company or an individual with fraud relating to a significant securities transaction is certainly not a noteworthy story. What is noteworthy is that this was a private transaction involving two sophisticated parties.
Source: Bye-Bye Big Boys? The SEC Turns its Enforcement Focus to Private Deals | King & Spalding – JDSupra
