Two men have been allegedly charged by the Securities and Exchange Commission of USA, for making profits by selling stocks of UBI Blockchain Internet a company claiming to have a blockchain-related business. The SEC had circulated a notice in January announcing the temporary suspension of trading in the securities of UBI Blockchain Internet, Ltd. (“UBIA”).
SEC’s crackdown of UBIA
With respect to its circular numbered and dated “Release No. 82452 / January 5, 2018” The Commission had temporarily suspended trading of UBIA shares as it believed that the company was not providing accurate information in its filings to the exchange regarding its businesses since at least September 2017. The suspension was also a result of concerns about the recent, uncommon and unexplained market activity in the company’s Class A common stock since at least November 2017.
This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act) where SEC asks for suspension of trading to protect investor interests.
The Commission had cautioned all broker-dealers, shareholders, and prospective purchasers that they should carefully consider the previous information along with all other currently available information and any information subsequently issued by the company. It has also warned the broker-dealers to avoid entering any quotation for UBIA shares and if any found guilty the Commission take prompt enforcement action.
SEC’s traps violators
The SEC ’s complaint that has been filed in federal court in New York, charges attorney T.J. Jesky and his law firm’s business affairs manager, Mark F. DeStefano, for making approximately $1.4 million by selling Common A class shares in UBIA. over a 10-day period from Dec. 26, 2017 to Jan. 5, 2018. As the complaint states Jesky, and DeStefano who hails from Nevada had received 72,000 restricted shares of UBIA stock in October 2017 and were permitted to sell at a fixed price of USD 3.70 per share determined under the registration statement. Instead of this both the violators unlawfully sold the shares at much higher market prices – ranging from $21.12 to $48.40 causes uncommon price movement in the stock.
Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, who is closely associated with the case was quoted saying,
“This case is a prime example of why the SEC has warned retail investors to be cautious before buying stock in companies that suddenly claim to have a blockchain business. This case involved both a trading suspension and people holding restricted shares who attempted to profit from the dramatic price increase with illegal stock sales that violated the registration statement.”
As a penalty SEC’s has asked the violators to pay $188,682 in penalties and be subject to permanent injunctions. The settlement is although subject to the court’s approval which will give its final verdict
SEC’s such steps are definitely cleaning the system and cracking down dubious companies trying to make money by fooling investor in name of blockchain and cryptocurrency. An important move as far as investors confidence is concerned in cryptos.
Will SEC continue to take action against dubious companies? Do let us know your views on the same.
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Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.