I was disappointed to learn that Kim Kardashian doesn’t read my blog posts, at least not all of them. With her hectic lifestyle she probably misses out on a lot of other fun stuff as well. Had Kim read my blog post on May 2, 2018 she would have known about section 17(b) of the Securities Act of 1933:
It shall be unlawful for any person. . . . to publish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof [italics added].
Kim was paid $250,000 to promote EMAX tokens to her 330 million Instagram followers. “ARE YOU GUYS INTO CRYPTO????” she wrote, including a link to Ethereum Max’s website. Whoops! By failing to disclose her compensation she violated section 17(b) and will now pay a $1.26 million fine to the SEC.
Sometimes it’s tempting to think of the SEC as all-powerful. In reality the SEC is a tiny agency compared with the size of the markets it regulates. Faced with a chronic shortage of resources, the SEC picks and chooses the cases to enforce, looking for easy cases with maximum visibility. Well, they couldn’t have asked for a better one. As of today another 330 million people know about section 17(b), almost doubling the number who knew from this blog.
Matt Damon, looking for a lawyer?
Questions? Let me know.