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SEC v. Platforms Wireless Int'l Corp.

SEC v. Platforms Wireless Int'l Corp.

United States Court of Appeals for the Ninth Circuit

June 8, 2010, Argued and Submitted, Pasadena, California; August 16, 2010, Amended

No. 07-56542, No. 09-55039

Opinion

 [*1081]  AMENDED OPINION

GOULD, Circuit  [**2] Judge:

This appeal concerns a civil enforcement action filed by the Securities and Exchange Commission ("SEC"). After concluding that there were securities law violations, the district court entered a final judgment under Federal Rule of Civil Procedure 54(b) pursuant to a partial summary judgment against Platforms Wireless International Corporation ("Platforms") and William Martin ("Martin"), its former Chairman and CEO. The district court held that Martin and Platforms sold unregistered securities to the public in violation of the registration provisions of Section 5 of the Securities Act of 1933, 15 U.S.C. § 77e, and that they issued a fraudulent press release in August 2000 in violation of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, promulgated thereunder. The district court ordered Platforms and Martin jointly and severally to disgorge about $ 1.75 million in proceeds from the sales that violated Section 5, plus almost $ 1 million in prejudgment interest. The court denied summary judgment on the SEC's allegations that Martin and Platforms also violated Section 10(b) and Rule 10b-5 by issuing five other press releases  [**3] between May 2000 and March 2001. Martin and Platforms appeal the partial summary judgment and disgorgement order; the SEC cross-appeals the partial denial of summary judgment. We affirm the partial summary judgment and disgorgement order, and we dismiss as moot the SEC's cross-appeal.

Platforms is an Oklahoma corporation whose stock is not registered with the SEC under the Securities Act of 1933 ("Securities Act"). Since March 2000, Platforms' stock has been traded on the Pink Sheets, now known as Pink Quote, an inter-dealer electronic quotation and trading system for registered and unregistered securities. 2 

At relevant times Platforms was working to develop a new technology, called the "ARC System," to provide cellular communications services to large geographic territories. Platforms represented that its ARC System would be a low-cost alternative to ground-based cellular antenna towers or satellites. The ARC System was to be comprised of two components: (1) a portable antenna payload, which would receive radio frequency signals from devices such as cellphones and  [**4] consolidate and relay those signals to ground stations; and (2) aircraft to carry the antenna payload, either several airplanes flying in rotating shifts or an aerostat (a lighter-than-air aircraft). It is undisputed that Platforms never built or tested a completed ARC  [*1082]  System, although by March 5, 2001, it had built and conducted limited ground-based testing on a prototype payload.

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617 F.3d 1072 *; 2010 U.S. App. LEXIS 17162 **

SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. PLATFORMS WIRELESS INTERNATIONAL CORPORATION; WILLIAM C. MARTIN; ROBERT D. PERRY; FRANCOIS M. DRAPER; CHARLES B. NELSON, Defendants-Appellants. SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee, v. PLATFORMS WIRELESS INTERNATIONAL CORPORATION; WILLIAM C. MARTIN; ROBERT D. PERRY; FRANCOIS M. DRAPER; CHARLES B. NELSON, Defendants-Appellants.

Prior History:  [**1] Appeal from the United States District Court for the Southern District of California. D.C. No. CV-04-02105-JTM, D.C. No. 3:04-cv-02105-JM-AJB. Jeffrey T. Miller, District Judge, Presiding.

SEC v. Platforms Wireless Int'l Corp., 559 F. Supp. 2d 1091, 2008 U.S. Dist. LEXIS 27503 (S.D. Cal., 2008)SEC v. Platforms Wireless Int'l Corp., 2010 U.S. App. LEXIS 15328 (9th Cir. Cal., July 27, 2010)

Disposition: JUDGMENT AFFIRMED. CROSS-APPEAL DISMISSED.

CORE TERMS

district court, press release, disgorgement, exemption, summary judgment, recklessness, transactions, proceeds, registration, underwriter, affiliate, misleading, issuer, unregistered, Securities Act, scienter, stock, genuine issue of material fact, prejudgment interest, sales, reasonable care, violations, ownership, shares, defendants', deliberate, investors, profits, qualify, calculation

Civil Procedure, Judgments, Entry of Judgments, Multiple Claims & Parties, Appeals, Appellate Jurisdiction, Final Judgment Rule, Summary Judgment, Summary Judgment Review, Appealability, Standards of Review, De Novo Review, Standards of Review, Securities Law, Exemptions, Exempt Transactions, Intrastate Offerings & Recapitalizations, Initial Offerings of Securities, Registration of Securities, General Overview, Business & Corporate Compliance, Required Contents of Registration Statements, Governments, Legislation, Interpretation, Exempt Persons, Motions for Summary Judgment, Supporting Materials, Affidavits, Entitlement as Matter of Law, Genuine Disputes, Materiality of Facts, Private Offerings, Regulation D, Securities Exchange Act of 1934 Actions, Implied Private Rights of Action, Deceptive & Manipulative Devices, Express Liabilities, Misleading Statements, Elements of Proof, Elements of Proof, Scienter, Recklessness, Civil Liability Considerations, Securities Litigation Reform & Standards, Record on Appeal, Criminal Law & Procedure, Procedural Matters, Records on Appeal, Abuse of Discretion, Remedies, Equitable Relief, Torts, Multiple Defendants, Securities Act Actions, Civil Liability, Secondary Liability, Controlling Persons, Damages, Prejudgment Interest, Types of Damages, Judgment Interest, Relief From Judgments, Altering & Amending Judgments, Grounds for Relief from Final Judgment, Order or Proceeding, Excusable Mistakes & Neglect, Newly Discovered Evidence, Excusable Neglect, Business & Corporate Law, Agency Relationships, Duties & Liabilities, Attorneys