Longfin Corp. CEO Venkata Meenavalli agreed to pay $400,000 in disgorgement and penalties to settle fraud charges brought by the SEC, according to a news release from the regulator.
The settlement, which is subject to court approval, concludes the SEC's actions against the company, Meenavalli and three other individuals, wherein the SEC has secured more than $26 million of ill-gotten gains.
The regulator 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. The SEC said 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 further stated that more than 90% of Longfin's reported revenue for 2017 was fictitiously derived from sham commodities transactions.
If approved, the settlement would require Meenavalli to disgorge his full salary received while acting as Longfin's CEO, amounting to $159,000, plus prejudgment interest of $9,000 and to pay a $232,000 civil penalty. The settlement would also require Meenavalli to surrender all 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 agreed to settle the charges without admitting or denying the SEC's allegations, according to the SEC.