On July 9, 2021, the US Securities and Exchange Commission charged Eric Watson, Oliver Barret-Lindsay and Gannon Giguiere in the US District Court for the Southern District of New York with insider trading for engaging in securities trades related to Long Island Ice Tea Corp. (LTEA, now known as Long Blockchain Corp.) ahead of the company’s announcement in December 2017 that it was converting from a soft drink manufacturer to a blockchain technology company.
According to the complaint, Watson, a corporate insider and controlling shareholder with LTEA, obtained material nonpublic information regarding the company’s blockchain transition; he shared the information with Barret-Lindsay, a friend and business associate, who in turn shared the information with his friend Giguiere. Within hours of receiving the tip, Giguiere purchased 35,000 shares of LTEA securities on the day before the LTEA announcement. On the day of the announcement, LTEA’s stock price rose by 388 percent, and Giguiere sold his shares within hours, realizing $162,500 in illegal profits.
The SEC charged all three defendants with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and is seeking a permanent injunction, disgorgement of all ill-gotten gains with prejudgment interest, and civil monetary penalties. The SEC has also requested that Watson be permanently barred from serving as an officer of director of any company with registered securities.
On February 19, 2021, the SEC revoked the registration of Long Blockchain Corp. securities pursuant to Section 12(j) of the Exchange Act because the blockchain business never became operational.
Since 2018, Barret-Lindsay, a Cayman Islands-based broker, and Giguiere, a stock promoter, have been involved in an active matter in the US District Court for the Southern District of California (along with three co-conspirators), where they are accused by the SEC of violating section 10(b) of the Exchange Act and Rule 10b-5 thereunder for their alleged participation in a stock manipulation scheme that caused a medical device company’s share price to rise from zero to $1.20 per share. Securities trading for the medical device company was suspended in 2018 after Barret-Lindsay and Giguiere began coordinating their trades through an FBI cooperating witness. While litigation in this case continues, Barret-Lindsay and Giguiere have pleaded guilty to criminal charges in a related matter.