We have previously reported on the SEC’s case against Longfin Corp and its founding CEO and controlling shareholder, Venkata Meenavalli. The SEC’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 Meenavalli’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 Longfin’s reported revenue for 2017 was fictitiously derived from sham commodities transactions.
On January 3, 2020 the SEC announced that Meenavalli agreed to pay $400,000 in disgorgement and penalties to resolve the SEC’s action against him. The settlement, which remains subject to court approval, concludes the SEC’s actions against Longfin, its CEO, and three other individuals in which the SEC has secured over $26 million of ill-gotten gains.
If approved, the settlement would require Meenavalli to disgorge $159,000 (his full salary received while acting as Longfin’s CEO) plus prejudgment interest of $9,000, and to pay a $232,000 civil penalty. It would also require Meenavalli to surrender all of his Longfin stock, permanently bar him from acting as an officer or director of a public company, and enjoin him from participating in the offer or sale of penny stocks. Meenavalli has agreed to settle the charges without admitting or denying the SEC’s allegations.