SEC Moves Against Tech Startup YouPlus for Defrauding Investors
- The founder of the company is also facing parallel criminal charges.
The United States Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) has charged YouPlus, a Startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c Read this Term building a machine-learning tool to analyze videos on the internet, and its founder and CEO Shaukat Shamim with fraud charges for defrauding investors by falsifying and misleading statements about the finances and sources of revenue for years.
On Monday's announcement, the SEC detailed that Shamim misrepresented the accounts from 2018 to 2019 when approaching investors and also managed to raise funds from them and continued this fraud multiple times.
The complaint detailed that Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. But none of them were true.
When an investor pressed Shamim to furnish details of those claims, he allegedly provided the investor with falsified bank statements in an effort to conceal the fraud.
Could not back with falsified documents for long
Shamim's plan, however, crumbled in late 2019, and he confessed to certain investors that YouPlus had, in fact, earned less than $500,000 and obtained only four paying customers from the company's inception in 2013, way less than his astronomical claims.
"As we allege in our complaint, Shamim and YouPlus drummed up interest in the company by providing false information about its financial performance and customer base," Erin E. Schneider, director of the SEC's San Francisco regional office, said. "Private companies engaged in early-stage fundraising must tell the truth when selling securities to investors."
In its complaint with the District Court of Northern California, the regulator charged the startup and Shamim with violation of antifraud provisions of the federal securities laws and seeks permanent injunctions, civil money penalties, disgorgement with prejudgment interest, and an officer-and-director bar against the CEO.
He is also facing criminal charges brought by the US Attorney's office in parallel with the SEC's charges.
The United States Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (SEC) has charged YouPlus, a Startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is c Read this Term building a machine-learning tool to analyze videos on the internet, and its founder and CEO Shaukat Shamim with fraud charges for defrauding investors by falsifying and misleading statements about the finances and sources of revenue for years.
On Monday's announcement, the SEC detailed that Shamim misrepresented the accounts from 2018 to 2019 when approaching investors and also managed to raise funds from them and continued this fraud multiple times.
The complaint detailed that Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. But none of them were true.
When an investor pressed Shamim to furnish details of those claims, he allegedly provided the investor with falsified bank statements in an effort to conceal the fraud.
Could not back with falsified documents for long
Shamim's plan, however, crumbled in late 2019, and he confessed to certain investors that YouPlus had, in fact, earned less than $500,000 and obtained only four paying customers from the company's inception in 2013, way less than his astronomical claims.
"As we allege in our complaint, Shamim and YouPlus drummed up interest in the company by providing false information about its financial performance and customer base," Erin E. Schneider, director of the SEC's San Francisco regional office, said. "Private companies engaged in early-stage fundraising must tell the truth when selling securities to investors."
In its complaint with the District Court of Northern California, the regulator charged the startup and Shamim with violation of antifraud provisions of the federal securities laws and seeks permanent injunctions, civil money penalties, disgorgement with prejudgment interest, and an officer-and-director bar against the CEO.
He is also facing criminal charges brought by the US Attorney's office in parallel with the SEC's charges.