SEC Obtains Final Judgment Against Attorney in Scheme to Manipulate Stock of Sports Ticket Broker
Litigation Release No. 24175 / June 26, 2018
Securities and Exchange Commission v. Richard Weed et al., No. 1:14-cv-14099 (D. Mass. Nov. 6, 2014)
USA v. Richard Weed et al., 1:14-cr-10348-DPW (D. Mass.)
On June 22, 2018, a federal district court in Massachusetts entered a final judgment against Richard Weed, formerly a partner in a Newport Beach, California law practice, for his role in defrauding investors in CitySide Tickets Inc., a Massachusetts-based ticket brokering business.
The final judgment imposes a permanent injunction against future violations of the antifraud provisions of the federal securities laws, a penalty of $150,000, and permanently bars Weed from serving as an officer or director of a public company and from participating in penny stock offerings.
In its complaint, filed on November 6, 2014, the SEC alleged that Weed helped structure CitySide into a publicly traded company through reverse mergers, created backdated promissory notes and authored false legal opinion letters that enabled two co-conspirators to obtain millions of purportedly unrestricted shares of stock in the company. The co-conspirators later sold those shares to unsuspecting investors after touting the company with false hype as a budding national leader in the ticket selling industry, realizing illicit proceeds of approximately $3 million.
In parallel criminal proceedings, Weed was convicted of criminal charges in May 2016, sentenced to 4 years in prison and 3 years of supervised release and ordered to pay a fine of $100,000 and to forfeit $90,000. His conviction was upheld in October 2017 by the First Circuit Court of Appeals, and his petition for writ of certiorari was denied by the U.S. Supreme Court in May 2018.
On May 10, 2018, the court granted summary judgment against Weed in the SEC case for violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judge ruled in his May 25, 2018 memorandum and order that Weed is prohibited from relitigating the issues in the SEC case that formed the basis of his criminal conviction. After summary judgment was granted, the remaining claim under Section 5 of the Securities Act was dismissed on the Commission's motion, concluding the case.