U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25990 / April 30, 2024
Securities and Exchange Commission v. Jack B. Blount, No. 4:24-cv-375 (E.D. Tex. filed April 30, 2024)
SEC Charges Former CEO of Dallas Area Cybersecurity Company with Fraud
The Securities and Exchange Commission today filed a complaint against Jack B. Blount, the former CEO of Intrusion Inc. ("Intrusion"), for making false and misleading statements in 2020 and 2021 regarding the company's purported success in marketing a cybersecurity product, the terms of multiple contracts, and Blount's background and experience. Blount has agreed to settle the SEC's charges. The settlement with Blount follows the SEC's settled action against Intrusion in September 2023.
The SEC's complaint alleges that from May 2020 through May 2021, Blount made or approved materially false and misleading statements in press releases, earnings calls, interviews, and other public statements. As alleged in the complaint, Blount overstated the company's success in marketing Intrusion Shield, a cybersecurity product, by falsely representing that most or nearly all beta-testing participants had converted to paying customers, when in fact less than half of such participants became paying customers. In addition, the SEC alleges that Blount and Intrusion misled investors about three customer relationships by omitting material information about the economic terms of one contract, prematurely claiming that a second contract had been executed, and falsely claiming that a third customer had signed a contract when it had not. Finally, the complaint alleges that Blount made misleading statements about his qualifications, experience, and accomplishments.
The SEC's complaint, filed in U.S. District Court for the Eastern District of Texas, charges Blount with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and Sections 17(a)(1) and (3) of the Securities Act of 1933 ("Securities Act"). Without admitting or denying the SEC's allegations, Blount has agreed to settle the matter by consenting to the entry of a final judgment that permanently enjoins him from future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and imposes an officer and director bar against Blount. The final judgment does not impose a civil penalty based on Blount's inability to pay. The settlement is subject to court approval.
The SEC's investigation was conducted and supervised by staff of the Fort Worth Regional Office, including Melvin Warren, Nikolay V. Vydashenko, B. David Fraser, and Eric R. Werner. The litigation is being conducted by Jason Rose and supervised by Keefe Bernstein.