In the case, Securities and Exchange Commission v. Joseph A. Rubbo, et al., two Florida Penny Stock Operators were charged by SEC with defrauding aged investors in penny stock schemes which involved the Florida entertainment firm and their product “Spongebuddy” (sec.gov, 2018). The move was primarily aimed at cracking down on the repeat offenders leading to the enforcement of actions against the 23 individuals. According to sec.gov (2018), Joseph Spera together with some former colleagues had schemed while posing as legitimate portfolio managers with the aim of inducing investment bankers to bring them ”over the wall.” They then proceeded to share nonpublic details concerning upcoming secondary offerings while agreeing not to disclose the information to others or trade before the offerings were announced. According to the law, it is crucial for the potential investor to be well-informed wand provided with adequate information for them to make a decision whether to invest but this was not the case. Arguably, Spera and his colleagues violated the agreement and tipped each other with confidential information which allowed them to trade for profits ahead of public announcements.
Based on the natural-law school of thought, laws ought to be founded on the universal moral order where human must use reason and choose between that which is believed to be good and evil (The Saylor Foundation, (n.y)). Evidently, Spera and his colleagues failed to adopt the universal moral order and opted to act to benefit themselves at the expense of the public. Failure to use universal moral order thus attracts harsh punishment and fine to force individuals and organisation to act responsibly. In this case, SEC’s primary focus is to protect the investors from fraud while ensuring that these investors are offered investment opportunities with vital information and disclosures demanded under the federal security laws. To create awareness among potential investors, SEC’s Office of Investor Education and Advocacy provided an Investor Bulletin outlining possible risks of taking part in the initial coin offerings.
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References
sec.gov (2018). SEC Charges Florida Penny Stock Operators With Defrauding Elderly Investors in Push to Crack Down on Repeat Offenders . Retrieved from https://www.sec.gov/litigation/litreleases/2018/lr24026.htm
The Saylor Foundation (n.y). Business Law and the Legal Environment. Retrieved from http://www.saylor.org/books
