Page 10 of 40 registration applies, then it is unlawful for any person, directly or indirectly, to offer and sell securities in interstate commerce. Section 5(c) of the Securities Act (15 U.S.C. § 77e(c)) provides a similar prohibition against offers to sell (or offers to buy) unless a registration statement is on file and in effect with the SEC. Sections 5(a) and 5(c) of the Securities Act prohibit the offer or sale of unregistered securities in interstate commerce absent an applicable exemption. 25. At all relevant times, Defendants KJ and Latinum were not registered as broker-dealers with the SEC or with the Financial Industry Regulatory Authority (“FINRA”) or associated with a registered broker-dealer. 26. An unregistered person who receives transaction-based compensation for the sale of a security violates section 15(a)(1) of the Exchange Act, 15 U.S.C. §78o(a)(1). 27. Persons who knowingly violate provisions of the Securities Act and the Exchange Act are subject to potential federal criminal prosecution for such violations and civil enforcement proceedings by the SEC. 28. The securities that Defendants KJ and Latinum offered were not registered with the SEC, and there was no applicable exemption from registration in effect for the offering. Case 2:22-cv-10208-RHC-JJCG ECF No. 1, PageID.10 Filed 02/01/22 Page 10 of 40
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