Longfin CEO Venkata S. Meenavalli has agreed to $400,000 to resolve SEC fraud action against him.
In a press release published on January 3, the United State Securities and Exchange Commission (SEC) said that the settlement is still subjected to court approval. The settlement “concludes he SECâ€™s actions against Longfin and its CEO, and three other individuals in which the SEC has secured over $26 million of ill-gotten gains.”
According to press release, if the court approves this settlement, Meenavalli would have to disgorge $159,000 plus prejudgment interest of $9,000, and to pay a $232,000 civil penalty. The settlement money may be distributed back to harmed investors, according to the regulator.
Meenavalli has agree to pay the charges without admitting or denying the allegation. The settlement also requires Meenavalli to surrender all of his Longfin stocks and permanently bans him for working as an officer or director of a public company.
The SEC complaint filed in June in United State District Court for the Southern District of New York alleged that Longfin Corp. was engaged in fraudulent scheme to obtain a listing on the Nasdaq Stock Market, LLC (the “NASDAQ”) after a fraudulent public offering.
The press release states:
“The SECâ€™s complaint alleged that Longfin and Meenavalli obtained qualification for a Regulation A+ offering by falsely representing in public filings that the company was managed and operated in the U.S. According to the complaint, Longfin and Meenavalli then distributed over 400,000 Longfin shares to Meenavalliâ€™s affiliates, and misrepresented the offering to Nasdaq in order to meet its listing requirements. The complaint also alleged that more than 90 percent of Longfinâ€™s reported revenue for 2017 was fictitiously derived from sham commodities transactions.”
Longfin Corp. is a SEC Qualified Reg A+ Public entity engaged in Alternative Finance / Shadow Banking powered by Artificial Intelligence and Machine Learning (FinTech). Anita B. Bandy, Associate Director of the Division of Enforcement, 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 staffâ€™s quick actions exposed the full scope of Meenavalliâ€™s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future.”
On April 6, 2019, SEC announced that it had obtained a court order freezing more than $27 million gained through illegal sales of shares involving the company, its CEO, and three other affiliated individuals. According to that complaint, shortly after Longfin began trading on NASDAQ and announced the acquisition of a purported cryptocurrency business, its stock price rose dramatically and its market capitalization exceeded $3 billion. Three men named Amro Izzelden “Andy” Altahawi, Dorababu Penumarthi, and Suresh Tammineedi then illegally sold Longfin shares to public collecting more than 27 million in profits.
The SEC further noted that the U.S. Attorneyâ€™s Office continues to pursue a separate criminal action against Meenavalli.
Longfin was one of a number of firms in the past year and a half that sought to drive investor interest by relocation its business activities on blockchain technologies.
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