SEC v. Longfin Corp., et al.
Case No. 19-cv-5296-DLC (S.D.N.Y.)
On June 5, 2019, the Commission filed a complaint (the “Complaint”) against Longfin Corp. (“Longfin”) and Venkata S. Meenavalli (“Meenavalli”) (collectively, the “Defendants”). According to the Commission’s complaint, the Defendants engaged in a scheme to obtain a NASDAQ listing through a fraudulent public offering under Regulation A+ of the JOBS Act. The Commission further alleged that, during 2017 and 2018, the Defendants also perpetrated an accounting fraud by reporting fictitious revenue from commodity transactions that resulted in a materially false annual report on Form 10-K for the year ended December 31, 2017, and a materially false quarterly report on Form 10-Q for the quarter ended March 31, 2018. See the Commission’s Complaint.
On September 26, 2019, the Court entered a final judgment against Longfin, ordering it to pay a total of $6,775,848 in disgorgement, prejudgment interest, and civil penalties to the Commission within 30 days. See Longfin’s Final Judgment.
On January 3, 2020, the Court entered a final judgment against Meenavalli, ordering him to pay a total of $400,000 in disgorgement, prejudgment interest, and civil penalties to the Commission, pursuant to the payment plan detailed therein with the final payment due within 360 days of the final judgment. See Meenavalli’s Final Judgment.
In both final judgments, the Commission was ordered to hold all funds, together with interest and income earned thereon (the “Fund”), pending further order of the Court.
The Fund currently holds $250,000 collected from Meenavalli. Accrued interest and additional collections on the Defendants’ respective final judgments will be added to the Fund.
On August 13, 2020, the Commission filed a Motion for an Order to Show Cause, seeking the entry of an Order to Show Cause why the Court should not approve the creation of a Fair Fund and the Commission’s proposal to combine the collections in this action, plus accrued interest and future collections, with the Fair Fund established in a related litigation, SEC v. Longfin Corp., et al., Civ. Act. No. 18-cv-2977-DLC (S.D.N.Y.) (the “Longfin Fair Fund”) for distribution pursuant to the distribution plan approved in that action (the “Plan”). See the Commission’s Motion. and Memorandum
On August 14, 2020, the Court granted the Commission’s motion and entered the Order to Show Cause. See the Court’s Order to Show Cause. Individuals and entities who purchased Longfin Class A common stock traded on the NASDAQ under the trading symbol LFIN from June 16, 2017 through the present, inclusive, or other interested parties are to show cause by September 13, 2020, if there is any, why the Court should not, (a) establish a Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002 for the monies in the Fund, comprised of all funds under the Court’s jurisdiction, plus accrued interest and future collections (the “Fair Fund”); and (b) approve the Commission’s proposal to combine the Fair Fund, with the Longfin Fair Fund for distribution to harmed investors pursuant to the Plan in SEC v. Longfin Corp., et al., Civ. Act. No. 18-cv-2977-DLC (S.D.N.Y.) (the “Related Action”).
On September 17, 2020, upon the expiration of the deadline in the Order to Show Cause, the Commission filed a Notice of No Objection seeking the entry of an order approving the Commission’s Motion. See the Commission’s Notice.
On September 21, 2020, the Court entered an order granting the Commission’s Motion establishing a Fair Fund (the “Fair Fund”) for the monies paid by the Defendants, along with any accrued interest and any future collections. The Court further ordered that the Fair Fund be combined with the Longfin Fair Fund for distribution pursuant to the Plan approved in the Related Action. See the Court’s Order.
The Claims Page for the Related Action can be found here.
For more information, please contact the Distribution Agent in the Related Action: