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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.