The US Securities and Exchange Commission has charged former Cayman Islands broker Oliver-Barret Lindsay, together with two other individuals, with insider trading in the stock of Long Blockchain Company, formerly known as Long Island Iced Tea Co.
In a complaint filed in the US District Court for the Southern District of New York, the SEC alleges that in 2017 New Zealander Eric Watson, a corporate insider and controlling shareholder of Long Blockchain, had tipped off his friend Lindsay, prior to an official announcement, of the company’s plans to switch its beverage business to blockchain technology.
Watson shared, among other things, a draft of the company’s press release with Lindsay, a Canadian, who at the time was “principal of CMGT Capital Management, a Cayman Islands-exempt broker-dealer registered with the Cayman Islands Monetary Authority”.
Lindsay allegedly passed the material non-public information on to his friend, Gannon Giguiere, a California-based stock promoter.
Within hours of receiving this confidential information, Giguiere purchased 35,000 shares of Long Blockchain stock.
According to the complaint, the company’s stock price skyrocketed more than 380% after the press release was issued. Within two hours of the announcement, Giguiere sold his shares for over $160,000 in illicit profits, the SEC said.
It is the second time in three years the SEC has charged Lindsay and Giguiere.
In July 2018, the SEC brought fraud charges against both in relation to a 2017 penny stock pump-and-dump scheme involving Kelvin Medical Inc., a purported medical device company, controlled by Giguiere.
Lindsay and Giguiere pled guilty to criminal charges in connection with the stock-manipulation scheme. They are due to be sentenced in that case in September.
Both have been released pending sentencing and Lindsay was allowed to return to Canada.
The Cayman Islands Monetary Authority suspended Lindsay’s director registration on 18 Oct. 2018.
The SEC’s complaint charges Watson, Lindsay, and Giguiere with violating the fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks permanent injunctions and civil penalties for all defendants, and an officer and director bar for Watson.
The commission revoked the registration of Long Blockchain’s securities on 19 Feb. 2021.