SEC Accuses Attorney and Manager of UBI Blockchain Internet of Illegal Stock Sales
The Securities and Exchange Commission (SEC) filed charges on June 2 against two men who allegedly benefited from the illegal sale of shares. This is the case of a company claiming to have a business related to blockchain.
SEC charges attorney and law firm business manager with illegal sales of UBI Blockchain internet stock https://t.co/SyRAjTCpHr
— SEC_News (@SEC_News) July 2, 2018
T.J. Jesky, attorney, and Mark F. DeStefano, manager of business affairs at his law firm, made approximately $1.4 million selling shares of UBI Blockchain Internet Ltd. All of this over a 10-day period from December 26, 2017 through January 5, 2018, according to the SEC complaint.
Sales of these shares were halted when the SEC temporarily suspended UBI Blockchain negotiations beginning in 2018. This is because of concerns about the accuracy of the statements in their SEC filings and unusual and unexplained market activity.
Robert A. Cohen, chief of the SEC Compliance Division's Cybernetic Unit, said:
“This case is a good example of why the SEC has warned retail investors to be cautious before buying shares in companies that suddenly claim to have a chain business. This case involved both a trade suspension and individuals with restricted shares who sought to benefit from the dramatic price increase with illegal sales of shares that violated the registration statement,”
The SEC complaints allege that Jesky and DeStefano, both Nevada residents, received 72,000 restricted shares of UBI Blockchain in October 2017. And they were allowed to sell the shares at a fixed price of $3.70 per share as per the registration statement.
The lawsuit alleges that Jesky and DeStefano illegally sold the shares at much higher market prices – ranging from $21.12 to $48.40 – when UBI Blockchain shares experienced an unusual price increase.
The SEC's lawsuit, filed in federal court in New York, accuses Jesky and DeStefano of violating the registration provisions of the federal securities laws.
Without admitting or denying the allegations, Jesky and DeStefano agreed to return approximately $1.4 million in ill-gotten gains. They will also have to pay $188,682 in fines and be subject to permanent court orders. The settlement is subject to court approval.
These SEC investigations are being coordinated by the Microcap Fraud Task Force and the CyberUnit and are being conducted by Michael D. Paley, Kevin P. McGrath, Tracy E. Sivitz, John P. Lucas and Ricky Tong.
The case is being monitored by Lara S. Mehraban and Mr. Cohen. The SEC appreciates the assistance of the Financial Industry Regulatory Authority, the Mexican Comisión Nacional Bancaria y de Valores, and the Panamanian Superintendencia del Mercado de Valores.
The SEC’s Office of Investor Education and Advocacy has issued an Investor Bulletin on initial coin offerings and a mock ICO website to educate investors. Additional information about ICOs is available on Investor.gov and SEC.gov/ICO.