U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23452 / January 22, 2016
Securities and Exchange Commission v. OTC Capital Partners, LLC et al, Civil Action No. 1:16-cv-20270 (S.D. Fla., filed January 22, 2016)
SEC Charges Otc Capital Partners, LLC, Its Principal, and Outside Legal Counsel with the Unregistered Offer and Sale of Securities
The Securities and Exchange Commission ("Commission") filed a civil injunctive action on January 22, 2016, in the United States District Court for the Southern District of Florida relating to the unregistered offer and sale of MusclePharm Corporation ("MSLP") securities. The Commission charged OTC Capital Partners, LLC ("OTC Capital"), a Florida corporation, Adi M. Elfenbein of Sunny Isles Beach, Florida, the principal of OTC Capital, and Joseph L. Pittera, Esq., of Torrance, California, outside legal counsel for OTC Capital, with the unregistered offer and sale of securities in violation of Sections 5(a) and 5(c) of the Securities Act of 1933 ("Securities Act").
The Commission's complaint alleges that from February to June 2011, Elfenbein, through his alter ego company OTC Capital, entered into ten transactions with MSLP in which OTC Capital obtained approximately 23.9 million shares of MSLP stock at a deep discount to the market price and illegally resold the shares to the investing public without complying with the registration provisions of the federal securities laws. OTC Capital and Elfenbein were able to sell this stock to the public only because OTC Capital's attorney, Pittera, issued incorrect legal opinions to MSLP's transfer agent opining that the shares were "free trading" pursuant to Section 5 of the Securities Act of 1933 ("Securities Act").
The Commission's complaint, which alleges that all of the defendants violated Sections 5(a) and 5(c) of the Securities Act, seeks permanent injunctions, civil penalties, disgorgement plus prejudgment interest, and other relief against all of the defendants.