After a long negotiation, the Securities and Exchange Commission (SEC) has settled charges with Longfin CEO, imposing a penalty of $400,000.
Announced last week, the market watchdog also obtained $26 million of the ill-gotten funds from the company and is in the process of setting up a fund to distribute the money to the victims.
A major ICO fraud deceiving the regulator
Last year, the SEC moved against Longfin and its CEO, Venkata Meenavalli, for selling $33 million worth unregistered securities. The CEO was additionally also accused of generating fake documents that recorded “sham revenue” of more than $66 million.
Moreover, the company also obtained qualification for a Regulation A+ offering by falsely representing in public filings that the company was managed and operated in the US.
As Finance Magnates reported earlier, in September, a New York court ordered the company and its Indian CEO to pay $6.8 million to the agency in fine.
Commenting on the settlement, Anita B. Bandy, associate director of the division of enforcement at the SEC, said: “As alleged in our complaint, Meenavalli abused the Reg. A+ process to conduct a fraudulent offering, list Longfin on Nasdaq, and entice investors with falsified revenue.”
“The SEC staff’s quick actions exposed the full scope of Meenavalli’s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future.”
Pending for court approval, the penalty was structured with Meenavalli’s full salary of $159,000 as CEO with prejudgment interest of $9,000 and a civil penalty of $232,000. In addition, he also has to surrender all of his Longfin stock, along with a permanent ban from acting as an officer or director of a public company, and prohibit him from participating in the offer or sale of penny stocks.
Despite SEC’s settlement, another criminal case filed by the US attorney’s office is ongoing against Meenavalli.
