The SEC has formally filed insider trading charges against three people involved with the Long Blockchain deal.
Long Blockchain Corp. is the new name that Long Island Iced Tea Corp. took on in 2017, a company that has been producing ready-to-drink iced tea and lemonade under the “Long Island” brand name since 2011.
The 2017 name change was officially made for “exploration of and investment in opportunities that leverage the benefits of blockchain technology”, but evidently these motivations did not seem plausible to the SEC.
In April 2018, the decision was made to delist LBCC’s stock from NASDAQ, and in July 2018 the SEC sued the company specifically in connection with the name change. In February 2021, the delisting took place, and since then Long Blockchain shares have only been traded OTC.
A few days ago, the SEC filed formal insider trading charges against three people involved in the company’s name change.
According to the SEC’s new complaint, Eric Watson, Oliver Barret-Lindsay and Gannon Giguiere engineered the name change in order to speculate on LBCC’s stock.
Insider trading in Long Blockchain
According to the SEC’s disclosure, Watson was in control of Long Blockchain and helped lead the change in the company’s name, which included replacing its previous name with one containing the word “blockchain“.
Watson allegedly then informed his broker friend Barret-Lindsay, even sharing with him a draft of the press release the company was about to issue to announce the name change.
Barret-Lindsay then passed the non-public information on to his friend Giguiere, and within hours of receiving the confidential information, Giguiere bought 35,000 shares of Long Blockchain.
After the publication of the announcement, the share price of the company rose by up to 380% intraday.
The SEC had previously indicted Barret-Lindsay and Giguiere for their alleged role in a securities manipulation scheme, and the two pleaded guilty.
The director of the SEC’s New York regional office, Richard R. Best, said:
“The SEC remains committed to preventing all types of fraudulent conduct in connection with purported ‘crypto’ companies, including profiting from trading on material non-public information”.
It is worth noting that neither Long Blockchain nor Long Island Iced Tea have anything to do with cryptocurrencies.
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