The U.S. Securities and Exchange Commission (SEC) has charged three individuals with insider trading ahead of Long Blockchain (formerly Long Island Iced Tea) pivoting from its beverage business to blockchain, a move that sent the shares sharply higher.
According to the пресс-релизу, in the complaint filed in the United States District Court for the Southern District of New York the regulator contends that Eric Watson, as a company-affiliated individual, aided in preparing the transformation and signed a confidentiality agreement, pledging not to disclose the firm’s plans.
However, he shared the news with broker Barret-Lindsay, providing him with even a draft of the filing.
Barret-Lindsay allegedly passed the received “material nonpublic information” to his friend Gannon Gigier, who within hours purchased 35,000 shares of Long Island Iced Tea.
«The company’s stock price surged after the press release, rising more than 380% intraday. In the following two hours after the announcement, Gigier sold the shares for more than $160 000 in illicit profits», the SEC said.
Long Island Iced Tea, which operates in bottled iced tea and lemonade, announced a rebranding and pivot to blockchain in December 2017 as bitcoin traded near $20,000.
The SEC charged Watson, Barret-Lindsay and Gigier with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The commission sought a permanent injunction and administrative sanctions.
The regulator cancelled Long Blockchain’s stock registration in February 2021. Nasdaq had delisted the shares in 2018.
Earlier in 2019, media reports said that possible insider trading in Long Blockchain’s stock was being investigated by the FBI.
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