May 13, 2024

Former executive reaches settlement with SEC to resolve insider trading charges

On May 3, 2024, the Securities and Exchange Commission announced that it reached a settlement with John Moretz, the former Chairman of Canadian-based public company Neptune Wellness Solutions, Inc..  According to the SEC’s order, Moretz tipped insider information in advance of an announcement regarding Neptune’s planned acquisition of North Carolina-based SugarLeaf Labs, Inc., a hemp extraction company.  Based upon the material nonpublic information (“MNPI”) that was shared, the wife of one of Moretz’s close friends allegedly opened an individual brokerage account for the purpose of purchasing Neptune stock.  During her initial meeting, the wife allegedly told her broker, among other things, that Neptune ”owned” a hemp facility in North Carolina and that the stock was going to increase to $12 per share (from approximately $3.50 per share) even though, at the time, Neptune had not yet acquired SugarLeaf and the planned acquisition had not been publicly disclosed.  According to the SEC, the wife ultimately purchased approximately $500,000 shares of Neptune stock against her broker’s advice and allegedly continued to purchase stock after the planned acquisition was announced.  As a result of the illicit trades, the wife allegedly generated almost $80,000 in unlawful profits.

The SEC accused Moretz of violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  However, according to the SEC’s Order, Moretz agreed to cease-and desist from committing future securities violations without admitting or denying the SEC’s findings.  He also agreed to pay a penalty of $115,000, and was also barred from serving as an officer or director for a period of three years.

SEC Press Release | SEC Cease-and-Desist Order