Document Security Systems

Kurta Law is investigating stock broker recommendations of Document Security Systems (NYSE: DSS). These investments are highly risky and may have violated securities rules and regulations. Regulation Best Interest (Reg BI) prohibits brokers from recommending investments that do not suit their investors’ risk tolerance. Consider contacting a securities attorney if you believe you may have a case against your brokerage firm. Call (877) 600-0098 or email info@kurtalawfirm.com.  

The Stock Offering  

Document Security Systems announced an offering of 11,200,000 shares of common stock in a prospectus dated June 5, 2019. The prospectus is the document that companies use to register their security with the SEC. At the time of filing the prospectus, the last reported sale price of Document Security Systems was $0.82.  

What is Document Security Systems?  

According to the prospectus, Document Security Systems specializes in fraud and counterfeit protection for printed documents and digital information. The company holds numerous patents for technologies that prevent unauthorized scanning and copying.  

Risks Associated with Document Security Systems  

The prospectus clearly states, “Our share price may be volatile and could decline substantially.” The prospectus cites several possible reasons for this, including shortfalls in revenues or “continued losses from operations.” Additionally, technology stocks are generally prone to extreme volatility. Any broker who recommended these stocks knew or should have known the risks involved.  

Kurta Law wants to highlight the other risks mentioned in the prospectus.  

Use of Proceeds  

The management team has broad discretion to use the proceeds from this offering as they see fit. They may not be able to use the money effectively and may not use the funds in a manner that stockholders agree with.  

Outstanding Options  

Options contracts give the owners the option to buy or sell securities at a certain price by a certain deadline. Outstanding options could adversely affect Document Security Systems’ ability to obtain future financing or engage in certain mergers or other transactions.  

Competitors  

It is possible that a competitor could announce new technological innovations that make their products more attractive to Document Securities Systems’ customer base.  

Executive Departure 

Document Securities Systems terminated its CEO in April 2019. The company was involved in ongoing talks regarding severance and other payments that may be due.  

Aegis Capital Corp. Underwriting   

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Kurta Law Securities Attorneys 

Our securities attorneys have outstanding experience handling disputes involving unsuitable investment allegations. Read testimonials from our clients here. Contact us today for a free case evaluation. Call (877) 600-0098 or email info@kurtalawfirm.com.