Tuesday, April 12, 2016

Servergy Investment Leads To Charges Against Ken Paxton, Texas Attorney General

The U.S. Securities and Exchange Commission has charged Texas Attorney General Ken Paxton with misleading investors in Dallas-based server technology developer Servergy, for raising hundreds of thousands of dollars for the company, but not disclosing he was making a commission to those investors. The SEC said that the company and CEO William E. Mapp III sold $26M worth of company stock in private offerings by misleading investors, but "could not in reality compete against those companies", and also specifically pinpointed a purportedly false claim from the company that it had an order from Amazon.com. Servergy--unlike most startups--had directly approached accredited investors via a private offering. The SEC said the fraud occurred while Paxton was in the Texas House of Representatives.