Judge Miriam Goldman Cedarbaum
Miwa incorporated Greenstone in 2004. In 2005 Miwa arranged its conversion into a publicly traded company. Greenstone hired Corporate Stock Transfer Inc. (CST) as its transfer agent. Between 2006 and 2008 Grindstone distributed millions of unregistered stock shares. To do so it, and counsel, sent legal opinion letters to CST stating facts purporting to satisfy its securities' exemption from registration under Rule 144(k). Attorney Sourlis wrote one such letter on Jan. 11, 2006. That letter stated that shares could be issued in exchange for certain convertible promissory notes issued by Greenstone's predecessor to "various vendors" before Jan. 10, 2004. However, the convertible notes described by Sourlis did not exist. Thus her statement that she was informed by the vendors that they held the notes for at least two years was false, as were her other statements in that letter. Finding the three elements articulated in Europe & Overseas Commodity Traders S.A. v. Banque Paribas London met, district court granted the SEC judgment on Sourlis' liability under §5 of the Securities Act of 1933. Absent Sourlis' letter, CST would not have issued the shares. That was enough to hold Sourlis liable under §5 for directly or indirectly offering to sell securities.
