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An attorney consented to a final judgment to resolve SEC charges of registration violations in connection with improper opinion letters issued to allow for the sale of control securities.
In a Complaint, the SEC alleged that Owen H. Naccarato produced two opinion letters asserting that Global Digital Solutions, Inc. ("Global Digital") had never been a shell company, that certain shareholders (who were the children of Global Digital executives) were not affiliates of the issuer, and that the sale of stock by these shareholders was protected by Securities Act Rule 144. These opinion letters allowed for the removal of restrictive legends on the securities and for their unrestricted sale. According to the SEC, Mr. Naccarato ignored clear red flags concerning the affiliate status of the shareholders. The SEC charged that Mr. Naccarato, through these improper opinion letters, served as a "substantial factor in the unregistered sale of Global Digital's securities."
As a result of the alleged misconduct, the SEC charged Mr. Naccarato with violating Securities Act Sections 5(a) and 5(c). He will pay $1,000 in disgorgement, $127.77 in prejudgment interest, and a civil penalty of $10,000. He is also barred from providing legal services related to the offer or sale of securities relying on any exemption from the registration provisions of the Securities Act.
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