SEC Charges Biotechnology Company, and CEO with IIIegal Sales of Stock and a Misleading Public Company Filing
Litigation Release No. 24232 / August 10, 2018
Securities and Exchange Commission v. Roger Duffield and Plandai Biotechnology, Inc., No. 18-CV-6984 (S.D.N.Y. filed August 2, 2018)
On August 2, 2018, the Securities and Exchange Commission charged Plandai Biotechnology, Inc., a penny stock company, and its Chairman and CEO with making illegal, unregistered sales of stock to unaccredited investors and with failing to adequately disclose that proceeds from sales of Plandai stock were sent to a private company owned by the CEO.
According to the SEC's complaint, filed in federal district court for the Southern District of New York, from November 2013 through January 2015, Plandai, acting through Roger Duffield, made unregistered offers and sales of Plandai common stock to at least two unaccredited and unsophisticated investors. In addition, although the shares in question had been newly issued and sold directly to the investors by Plandai, Duffield allegedly instructed the investors to wire their payments to a private company that he owned and controlled. Plandai's annual report for the fiscal year ending June 30, 2014, misleadingly stated that Plandai had received cash in exchange for the shares, and did not disclose that the proceeds from the sale were actually sent to Duffield's private company. Although Duffield, through his private company, ultimately paid various Plandai business expenses in amounts approximating the payments that had been received from the investors, Plandai did not accurately and fairly record these transactions in its books and records. Plandai's failure to properly record these transactions allegedly resulted from its lack of a sufficient system of internal accounting controls.
The SEC's complaint charges Plandai and Duffield with violating the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. The complaint also charges Plandai with violating, and Duffield aiding and abetting violations of, the reporting, books and records, and internal accounting controls provisions of and Sections 13(a), 13(b)(2)(A) and (B) of the Securities Exchange Act of 1934 and Rules 12b-20 and 13a-1 thereunder. The SEC seeks permanent injunctions and financial penalties against both defendants.
The SEC's investigation was conducted by Drew M. Dorman, Jason Litow, and Kevin Gershfeld. The case was supervised by Yuri B. Zelinsky and Antonia Chion. The SEC's litigation will be led by John Bowers and Paul Kisslinger and supervised by Cheryl Crumpton. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.