Recent Posts
  • By /
  • 1038

New SEC Rule Will Offer Up to $60 Million

New SEC Rule to Reg. A Will Offer Up to $60 Million of Securities Annually

New amendments to Super Regulation A are being adopted by the Security and Exchange Commission, along with other new SEC rules and forms to implement Section 401 of the Jumpstart Our Business (JOBS) Act.

Section 401 of the JOBS Act also added Section 3(b)(2) to the Securities Act of 1993, which directions the Securities and Exchange Commission to adopt rules that exempt from the registration requirements of the Securities Act offerings of up to $60 million of securities annually.

The final new SEC rule of Super Regulation A include the following: issuer eligibility requirements, content and filing requirements for offering statements, along with ongoing reporting requirements for issuers in Regulation A offerings. These new SEC rules and form amendments will be effective as of June 19, 2015.

The U.S. Government Accountability office, or GAO, recently reviewed the SEC’s new rule on the amendments for small and additional issues exemptions under the Securities Act, also known as Regulation A. It found the following: the final rules adopt amendments to Regulation A and other rules and forms to implement section 401 of the JOBS Act; the final rules build on current Regulation A and preserve with some modifications, existing provisions regarding issuer eligibility, offering contents, testing the waters, and bad actor disqualifications; the final rules modernize the Regulation A filing process for all offerings, align practice in certain areas with prevailing practice for registered offerings, create additional flexibility for issuers in the offering process, and establish an ongoing reporting regime for certain Regulation A issuers; the rules contain certain additional requirements for Tier 2 offering (such as a requirement to include audited financial statements in the offering documents and to file annual, semiannual, and current reports with the SEC). The GAO also found that the SEC complied with applicable requirements in disseminating the rule.

In simpler terms, the proposed rules will create a two-tier system with easier requirements for small offerings (defined as up to $5 million annually) compared to stricter requirements for larger offerings (up to $60 million annually), while also modernizing the Regulation A filing process to be consistent with current practice for registered offerings. The key impact is that nonpublic issuers would be allowed to raise up to $60 million from non-accredited investors in a public offering. Regulation A offerings are public offerings with no prohibition on general solicitation and general advertising that are exempt from the filing requirements of the Securities Acts of 1933 and 1934. Currently, Regulation A permits unregistered public offerings of up to $5 million of securities in any 12-month period by non-SEC reporting U.S. and Canadian issuers. The Regulation A exemption requires issuers to file an offering statement, which is similar to abbreviated version of a prospectus in a registered offering, in paper format with the SEC.

For more information on Super Regulation A, or the new SEC rules, contact, Zachary O. Fallon, Special Counsel, Office of Small Business Policy, Division of Corporation Finance, at (202) 551-3460; or Shehzad K. Niazi, Special Counsel, Office of Rulemaking, Division of Corporation Finance at (202) 551-3430, U.S. Securities and Exchange Commission, 100 F Street, NE, Washington. DC 20549-628.

Accredited Investor Qualifications

Will the SEC Change the Accredited Investor Qualifications?

The SEC sets the accredited investor qualifications criteria and hasn’t made changes to the income qualification since 1982. In order for an investor to be considered accredited, they need to make $200,000 a year as an individual or $300,000 with their spouse. They need to have met the income standard for the past two years and be likely to do so again in the current year.

Inflation

When inflation is taken into account, a person making $200,000 a year in 1982 will need to make $495,000 a year in 2014 in order to have the same purchasing power. This uses a calculation of 2.88 percent inflation per year with a total inflation of 147.92 percent from 1982 to 2014. The average income growth rate in the United States has kept pace at 4.13 percent while currently only at 1.58 percent. Given these statistics, now would not be a good time for the SEC to raise the income criteria for an accredited investor. If the adjustments had been made during a period of economic growth, it may have made more sense. Currently, however, the average citizen is just recovering from a period of negative wage gains and seeing some stabilization.

If the SEC does move forward in raising the minimum income requirements

This is an important topic of discussion because if the SEC does move forward in raising the minimum income requirements, the number of accredited investors would significantly decrease which would further restrict access to capital. The U.S. economy has started showing signs of growth but with current global unrest and wage growth of only 1.58 percent nationally, consumer confidence is still low. This is already creating a situation where some investors are sitting on the fence. Eliminating others will only make the economy worst by making it more difficult for businesses to raise money for expansion which in turn creates new jobs.

What it means to be an “Accredited Investor”

The last time the SEC changed the definition of what it means to be an accredited investor was in 2011. In January of 2011, the SEC announced they were considering making changes to the net worth standards so that a primary residence could not be included in someone’s net worth. In December of that year, the new guidelines were finalized. It took almost a full year for the process to complete but once done, accredited investors could no longer use the positive equity in their home to help them qualify. This eliminated many investors that had been counting on home equity to increase their overall net worth. Home equity was also a standard addition when applying for loans and meeting various banking criteria. While fairly standard, the SEC felt it was a necessary measure after the housing market collapsed.

If the SEC follows through with changing the income criteria for an accredited investor, it may not be done until the middle of next year. This is following the timeline of how long it took for their last revision to be completed. Companies should be aware that this is on the horizon and create their private placement now so that money can be raised before the pool of potential investors shrinks. For a list of accredited investors visit www.SalesLeads.tv or www.AccreditedInvestors.net.

How to Find Accredited Investors Online

Finding Accredited Investors Interested in Your Investment Opportunity

If you are raising money, it is important to find accredited investors that are interested in your opportunity. There are several ways to make your opportunity more appealing, and it is important to start with a well-crafted private placement and executive summary. Without these documents in hand, you will not be ready to pitch your deal. You can create it yourself or work with a lawyer or private placement company to have one created. The latter is less expensive than an attorney and will still help to craft your message. With a killer PPM in hand, you can start to reach out to investors.

There are several traditional ways of finding SEC Accredited Investors. This has typically been done by speaking at angel investment forums and networking within the local community. These are still viable options that should be explored, however, this is a modern era. Almost everything that was once done in person can now be started online. Companies like www.AccreditedInvestorLeads.com and www.SalesLeads.com now have an online site you can visit to secure an accredited investor lead list.

Here are some other sites that can help you on how to find accredited investors online:

LinkedIn. This is a social networking site that is geared towards professionals. You can build a network of people throughout the world and use them as online referral sources. Instead of strictly relying on local attorneys, bankers, and CPAs to refer investors to you, these online connections can become remote referral sources. While it takes time to sift through your connections, it is still a faster way to connect with more referral sources.

GoBigNetwork. This is a place for investors and entrepreneurs to connect. It is primarily geared towards the tech industry, but anyone can participate. Simply create a profile and post your opportunity to be viewed by investors at their convenience. You never know who you will meet through a platform like this.

Gust.com. This is another online platform that allows start-ups to post about their company and investment opportunity to be reviewed by the investment community. Consider it as your online pitch, instead of the in person one. When people become interested, they will reach out for more information.

Angel.co. Companies and entrepreneurs can connect through this platform so that businesses can raise money, and investors have access to additional deals. The investments start at $1,000 which enables a larger group of investors to participate.

These sites represent an excellent opportunity to expose your private offering to a wider audience. The challenge is that you are not in control. If you need to find accredited investors, these sites turn the table so that they can find you. By posting your opportunity, investors can view your information and the details but you are typically unable to reach out to them directly. It is a good strategy to implement in combination with traditional methods like calling leads from an accredited investor list. This way you can be proactive with your activities while marketing your offering to a larger audience.

What is a Reg D Accredited Investor?

If you are looking to raise money or sell investments, it is important to know what a Reg D Accredited Investor is and how to find them. This is a select group of individuals with a high-income earning and a high net worth. You can’t tell who is accredited simply by looking at them. Rather, there are set guidelines that have been created by the SEC as to who can be considered accredited.

Guidelines for Being a Reg D Accredited Investor

The SEC has created these guidelines, and each investor must pass them continuously in order to be accredited. Just because someone was accredited in the past, does not mean they are today.

1) They have made $200,000 or more as an individual over the past two years and are likely to do so again in the current year, or they make $300,000 a year combined with their spouse and are likely to do so again OR

2) They have a net worth of $1 million or more, excluding their primary residence.

The income calculation is fairly simplistic except for individuals that own a business. Many business owners make this amount of money but by deducting things like depreciation and amortization, their tax returns do not indicate this level of income. The net worth qualification is fairly straightforward with one exception. If someone owes more money than their house is worth, the negative equity needs to be deducted from their total net worth. This does not apply to positive equity.

Becoming Certified as a Reg D Accredited Investor

Most investors self-certify, meaning that they sign a document stating how much they make or what their net worth is and sign it. This works perfectly well when companies are raising money using Reg D Rule 504, 505, or 505b. If, however, the company is raising funds using Reg D Rule 506c, a third party must provide the certification after reviewing financial documents. This can be a member of the company, an attorney, licensed broker-dealer, or CPA.

Why Working with a Reg D Accredited Investor is Smart

These investors are more likely to have disposable income to invest. Their income is high and has been so for a period of time, or they have significant assets already, sometimes both. This makes them the ideal prospect for investing in private placements, starting a brokerage account, buying property, etc.

Finding Investors

If you are looking to work with accredited investors, you will need help finding them. Unlike traditional sales leads, these leads must be qualified and full of people that meet the SEC standards. They are difficult to locate and can take years of networking in order to build a solid lead base. Fortunately, you can purchase a lead list of accredited investors from both www.salesleads.tv and www.accreditedinvestorleads.com. This enables you to spend the majority of your time pitching deals and walking people through closing, rather than wasting time looking for names and phone numbers.

Accredited Investor Lists Help Raise Money

An Accredited Investor List Can Help You to Raise Money

If you are raising capital, an accredited investor list can help you to reach more investors that are qualified and able to put money into your deal. When raising money using a Reg D offering, it is important to work with accredited investors to stay in compliance with the SEC. The challenge is that there is no way to tell if someone meets the qualification standards when you meet them. A list will help to save you time by sending you directly to the people that meet the SEC standards.

The SEC has set criteria for what makes a person an accredited investor. This includes:

Income. The investor needs to make $200,000 a year by themselves for the past two years or $300,000 per year with their spouse. They must also believe that their income will continue at that level or greater.

Assets. An investor may qualify if their net worth is over $1 million, excluding their primary residence. In order to calculate net worth, review their assets and liabilities. Once their debts, minus their first mortgage, have been deducted from their total assets you get their net worth.

Even when people have good jobs and a big house, they may fall short of the SEC’s standards for what makes an accredited investor. This is why purchasing an accredited investor list can save you a lot of time. You won’t have to wonder or guess if someone meets the criteria. All you need to do is pick up the phone and start calling.

The accredited investor list can be broken down by several areas including demographics, geographic location, and even industry niche. For example, you can purchase oil and gas leads to raise money for a private placement in that industry. The more you narrow down your lead list; the better your chances of success are. This means you will spend less time on research and trying to make connections and more time actually pitching your deal.

You can purchase an accredited investor list from either www.salesleads.tv or www.accreditedinvestorleads.com. When speaking with a representative let them know if you are looking for leads in a certain geographic area or any other qualifiers you need.

Before you call, make sure that your private placement is ready to go. It should be prepared in compliance with Regulation D and include an executive summary, financial information, a business plan, market analysis, competitive analysis, information on leaders and a term sheet. Be sure also to include disclosures and risk factors. It is impossible for every deal to go exactly as planned and market conditions can change with the wind so leaving out risk factors is unwise. When making calls, your pitch should be a summarized version of what is in your private placement. Give enough information for them to want to learn more, but not too much to bore them or give an information overload. Keep track of everyone you speak with and who gets copies of your private placement. Follow up with your accredited investor list and start to raise capital.

Learn What Makes a Qualified Investor

Whether raising money for a private placement or building your portfolio of investment clients, working with a qualified investor will help to improve your success. By working with a premier group of investors, you will be able to accomplish more in less time. The key is understanding what makes a qualified investor and how to find them.

The definition of a qualified investor is determined by the type of investment vehicle they are investing in. For example, anyone can invest in the stock market where accredited investors can invest in private offerings. If you are targeting investors to expand your client portfolio, the key is to look at how much they have to invest and what their future earning potential looks like. As a general rule of thumb, most investment brokers prefer to work with people that have at least $50,000 available to invest.

The best qualified investor is one that is an accredited investor with cash to invest. An accredited investor is someone that makes $200,000 a year as an individual or $300,000 with their spouse. They are required to have made this amount in the previous two years and be likely to continue earning at that level. Investors can also qualify using their total net worth, which must be greater than $1 million, excluding their primary residence. These are excellent investors to work with because they are able to participate in private offerings by investing in private placement memorandums. Since they make a higher than average amount, they are likely to have capital they can invest on an annual basis. Once you have a pool of investors to work with, you will be able to present them with opportunities that are tailored to their investment appetite.

The SEC has another classification of investors, “sophisticated investors”. Qualified investors with this designation may participate in Regulation D Rule 506b offerings. This has been the most common type of private placement. In order to be considered sophisticated an investor must have outside knowledge of financial matters that make them qualified to evaluate investment opportunities and to make informed decisions about them. A good example would be a business banker, investment broker, CPA, attorney, or someone with a degree in finance. Their education and on the job experience gives them valuable information and resources without necessarily paying them the amount required to be considered accredited. This rule is slightly ambiguous so before working with sophisticated investors you should create a checklist or policy document that clarifies your internal standards. This way, when you say someone is a qualified investor because they are sophisticated, you can prove how you arrived at that conclusion.

When raising capital for a Reg D private offering make sure to work with qualified investors and to document what makes them qualified. For Regulation D Rule 504, 505, and 506b, investors can self-certify. This means that if you give them a document, they can check the applicable boxes, write in their income and net worth, and sign the form stating they are accredited. If you are raising money for a Reg D Rule 506c offering, you must have outside verification of their accreditation status. Keep track of how you arrived at your conclusions for compliance purposes.

To start raising money today purchase your own list of qualified investors from www.accreditedinvestorleads.com or www.salesleads.com.

Rules Around Telemarketing Securities

Getting Familiar with SEC Telemarketing Rules

Many firms use telemarketing as a way to reach their customers. An often criticized approach, it is also highly effective in getting people to engage in conversation which is the first step to closing a sale. It is important for companies involved at any level in the sale of securities, however, to know that the Securities and Exchange Commission (SEC) has very stringent rules that they require be followed when cold calling prospective customers. With governing agencies like Financial Authority Regulatory Authority (FINRA) paying close attention, it behooves any cold caller to follow the rules.

There are restrictions placed on the time a cold caller may call someone at their residence.

The time, between the hours of 8:00am and 9:00pm, does not apply to calls to a work number or to people who have previously given the vendor permission to call them. As a general rule of thumb once a relationship of any sort is established with a client, it is always a good idea to get written permission to call them at their home, as this prevents any confusion and potential liability with either FINRA or the SEC’s telemarketing rules.

The Federal Trade Commission (FTC) is another agency that is intimately involved in regulating calls to consumers.

The Do Not Call Registry is available to any consumer and they may put their name on it at any time. Once a consumer has placed their name on the do not call list, vendors are required to take their name out of the database and not call them again. During the course of a cold call a consumer may request that they be placed on a company’s “do not call” list and the FTC requires compliance. There are exceptions and loopholes to this regulation, including calls from a friend or acquaintance, but it is far more prudent for a company to simply lose the contact than risk fines or worse from the regulators. When you make a call, the consumer may still request to be put on the do not call list and it is equally as binding.

Once the telemarketer has the consumer on the phone, it is required that they tell the consumer the following information promptly.

The caller’s name, their firm’s name, an address or telephone number for the firm, and that the purpose of the call is to sell you an investment. These disclosures are mandatory and should be made in a clear and concise manner, checking for understanding so that there is no confusion on the part of the consumer that could lead to a FINRA, SEC, or FTC complaint at a later date. Many companies make a habit of recording telemarketing calls for exactly this reason, so that they can demonstrate compliance with the requirements.

Brokers, telemarketers, investment advisors, and anyone else selling an investment cannot take money out of a consumers account without written permission. Authorization can come in the way of a form or a signed check, but money cannot change hands for an investment until the consumer has given that written permission. If a consumer requests written clarification to their questions or more information in the investment, the company selling the investment is required to comply before taking any money or enrolling the consumer in any programs.

Finally it is critical that telemarketers tell the truth when soliciting for investment over the phone, or at any time. The slightest exaggeration about any part of the investment opportunity by an overzealous telemarketer is considered a lie and a breach of Federal and State securities law.

Telemarketing is an effective way to get in front of customers, and having taken the proper precautions is advisable for most firms. The challenge is to ensure that all the sales staff are following the laws set out by the various agencies and for the company to have safeguards and procedures to ensure compliance.

Get Qualified Leads from SalesLeads.tv by calling 800-590-5323

Chicago CPA Charged with Insider Trading

Chicago, IL: Federal Prosecutors have charged a certified public accountant and former director of corporate audits for Chicago based Allscripts Healthcare Solutions with insider trading.

Steven M. Dobrowski has been charged with 16 counts of securities fraud in the indictment, each of which carries a maximum penalty of 20 years in prison and a fine of $5 million.

According to the indictment, Dombrowski who is 49, used non-publically disclosed about Allscripts performance in the first quarter of 2012 for personal benefit. Using knowledge he had learned auditing and testing the processes and procedures Allscripts uses to compute and report it financial performance, Dombrowski accumulated trade profits of $286,000. In order to discuss his efforts at using insider information, Dobrowski purchased options through a trading account which he set up, and controlled, in his wife’s maiden name.

Because of his intimate knowledge of the company’s internal financial reporting, Dombrowski decided to sell short 1,000 shares of Allscripts stock in the weeks leading up to the earnings release, as well as buy more than 510 options that would be profitable if the company’s share price declined, the SEC said.

After the earnings release, Dombrowski liquidated and closed his positions and took in more than $286,000 in illegal profit. On April 26, 2012, Allscripts announced first quarter financial results that were much worse than the market had expected. Allscripts also announced that its Chief Financial Officer would soon leave the company for another job, and that the Chairman of the Board and several other members of the Board had resigned. Immediately after the announcement Dombrowski purchased Allscripts stock to close his short position, and the next day, on April 27, Dombrowski sold all of his options positions as Allscripts’ common stock fell $5.72, or approximately 35.7% from the previous day’s close.

“As alleged in our complaint, Dombrowski attempted to profit off his company’s poor financial results and hide his breach of duty to his employer by conducting his illegal trading through his wife’s account,” said Timothy L. Warren, associate director of the SEC’s Chicago office.

The Securities and Exhange Commission (SEC) in a parallel actions, is seeking a judgment that permanently enjoins Dombrowski from future violations of these provisions of the federal securities laws, orders him to disgorge all of his ill-gotten gains, plus prejudgment interest, and orders him to pay an appropriate civil penalty. The SEC also seeks an order requiring Dombrowski’s wife, relief defendant Lisa Fox, to pay disgorgement, plus prejudgment interest, as Dombrowski’s illegal trades were in her account.

 

Money Manager Charged With False Advertising

New York, NY: The Securities and Exchange Commission (SEC) has charged a New York based money manager and his firm of false advertising.

The charges stem from claims made by the company on their Twitter, newsletters, and other communications about the success of their investment advice and a mutual fund that the firm manages.

In an SEC order issued against Mark A. Grimaldi and Navigator Money Management (NMM), the SEC found that they selectively promoted and touted the performance of the Sector Rotation Fund (NAVFX) and specific securities recommendations they had made to client in the past. The order found that the firm cherry picked what it chose to highlight, while excluding less favorable data and relevant facts that would have painted a more complete picture.

“The securities laws require investment advisers to be honest and fully forthcoming in their advertising to give investors the full picture.

Grimaldi and his firm are being held accountable for using social media and widely disseminated newsletters to cherry-pick information and make misleading claims about their success in an effort to attract more business.” said Sanjay Wadhwa, senior associate director for enforcement in the SEC’s New York Regional Office.

According to the SEC’s order, The Money Navigator is a newsletter which was used extensively by Grimaldi and NMM to solicit clients. For the Sector Rotation Fund. Grimaldi, who is the majority owner, president and, Chief Compliance Officer of NMM, promoted their successes in a way that was misleading and did not give a full accounting. For example, according to the details provided in the SEC order they misleadingly claimed in a December 2011 newsletter that Sector Rotation Fund was “ranked number 1 out of 375 World Allocation funds tracked by Morningstar.”  However, a time period of Oct. 13, 2010 to Oct. 12, 2011 was cherry-picked to broadly acclaim that ranking, and Sector Rotation Fund had a poorer relative performance during other time periods.  From Jan. 1 to Nov. 30, 2011, the day before Grimaldi published the ad, at least 100 other mutual funds in that same Morningstar category outperformed Sector Rotation Fund.

The investigation and subsequent SEC order process began in 2008, when the SEC conducted an investigation of NMM and a fund it manages.

The SEC staff conducting the investigation then informed NMM that the newsletters could be considered a solicitation or advertisement under Rule 206(4)-1, which generally prohibits false or misleading advertisements by investment advisers.  SEC staff also noted that the newsletters could be considered advertisements under Rule 482, which governs advertisements for mutual funds and other investment companies and has specific requirements for ads containing performance data.

Other violations detailed in the order claim that NMM was advertised as a “five star (Morningstar) money manager” in the newsletters, on the website, and in emails sent out. This would be misleading because Morningstar rates mutual funds, not investment advisors. Grimaldi is also found to have made misleading statements on Twitter. He claimed responsibility for model portfolios in his newsletters that “doubled the S&P 500 the last 10 years.”  However, Grimaldi made the claim even though he had no involvement in the model portfolio performance for the first three years.

Grimaldi and NMM, without admitting to any of the specific finding have agreed to pay a $100,000 fine, to be censured, and to comply with certain undertakings including the retention of an independent compliance consulting company for three years. The company also agreed to cease and desist from future violations of these sections of Securities Laws.

Advertising, regardless of their source, can often be misleading with even small discrepancies painting an entirely different picture from reality. Vetting and conducting due diligence is highly recommended for any investor, regardless of whom you are dealing with or what the level of interaction.

Executives Charged with Securities Fraud

Austin, Texas: The Federal Bureau of Investigation (FBI) announced today that ArthroCare Corporation has agreed to pay $30 million in a monetary penalty to resolve charges that senior executives in the company engaged in securities fraud.

ArthoCare is a multi-business medical device company that manufactures, develops, and markets medical devices. However, members of the company’s executive staff have been charged with perpetrating securities fraud that resulted in more than $400 million in losses to investors. According to information released by the FBI ArthoCare perpetrated the fraud between December 2005 and 2008. ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock. On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share. The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.

“Truthful corporate earnings reports are critical to the soundness of our financial system. Today’s indictment alleges that those at the top of ArthroCare deceived investors and regulators by manipulating the company’s reports to inflate its stock, ultimately causing hundreds of millions in losses in shareholder value. The Criminal Division will continue to aggressively pursue corporate executives who undermine our financial markets for personal gain.” said Acting Assistant Attorney General Raman.

In a deferred prosecution agreement with prosecutors, ArthoCare admitted that senior executives inflated the company’s revenues by millions of dollars, artificially driving the shares higher. The company also admitted that its senior executives had conducted a number of sham transactions which were used to manipulate ArthoCare’s the earnings reports delivered to investors. Other revelations included a systematic “parking” of millions of dollars’ worth of medical devices at distribution facilities and then reporting these shipments as sales in its quarterly and annual filings, causing the company to appear to have met or exceeded external earnings forecasts

Two senior vice presidents John Raffle and David Applegate had previously plead guilty to conspiracy to commit securities and wire fraud in connection with the fraud scheme. David Applegate, 54, pleaded guilty before U.S. Magistrate Judge Mark Lane in Austin, Texas, to two counts of a superseding information which charges him with conspiracy to commit securities, mail and wire fraud, and with a false statements violation. Applegate admitted that he and other co-conspirators inflated falsely ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving ArthroCare’s distributors and that he and other co-conspirators caused ArthroCare to file a Form 10-K for 2007 with the U.S. Securities and Exchange Commission that materially misrepresented ArthroCare’s quarterly and annual sales, revenues, expenses and earnings.  Other executives are also facing charges in 2014. ArthroCare’s former chief executive officer, Michael Baker, and chief financial officer, Michael Gluk, are scheduled to stand trial on related charges on May 5, 2014.

“These senior corporate executives participated in a scheme to artificially inflate their company’s stock prices, cheating shareholders and the investing public out of hundreds of millions of dollars,” Assistant U.S. Attorney General Lanny Breuer said in a statement.