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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23418 / December 3, 2015

Securities and Exchange Commission v. NetCirq, LLC, Misc. No. 4:15-mc-80289 (N.D. Cal. filed November 25, 2015)

SEC Files Subpoena Enforcement Action Against Netcirq, LLC for Failure to Produce Documents

The Securities and Exchange Commission announced today that on November 25, 2015, it filed a subpoena enforcement action in the U.S. District Court for the Northern District of California against NetCirq, LLC (“NetCirq”). According to the Commission’s application and supporting papers, the Commission is investigating whether NetCirq and others have violated or are violating provisions of the federal securities laws in connection with transactions involving pre-IPO companies, including transactions that may constitute security-based swaps or secondary market trading in possible violation of certain registration requirements. Pursuant to the Commission’s subpoena dating back to May 2015, NetCirq was obliged to produce documents to the Commission, but failed to do so.

The Commission’s application alleges that NetCirq purports to be a private equity marketplace that resells private securities and portfolio interests creating a secondary market for private equity. The Commission’s application explains that NetCirq claims that it has conducted a number of transactions of securities involving pre-IPO companies. However, according to the Commission, none of the transactions have been conducted pursuant to a registration statement, nor were they executed on a national securities exchange. NetCirq also is not a registered broker-dealer. 

As part of its investigation, the staff in the Commission’s San Francisco Regional Office served NetCirq with a Commission subpoena in May 2015 seeking, among other things, documents relating to NetCirq’s activities creating a purported private equity marketplace and NetCirq’s transactions involving securities of unregistered issuers. According to the Commission, although NetCirq admitted that it maintained relevant documents, NetCirq has failed to produce any documents in response to the subpoena. NetCirq also has failed to respond to the Commission staff’s repeated efforts to secure NetCirq’s compliance with the Commission subpoena. 

The Commission’s application seeks an order from the federal district court compelling NetCirq to comply with the Commission’s administrative subpoena and to produce all responsive materials to the staff. The Commission is continuing its fact-finding investigation and, to date, has not concluded that anyone has violated the federal securities laws.

http://www.sec.gov/litigation/litreleases/2015/lr23418.htm

Modified: 12/03/2015