SEC Charges Former CEO of Technology Company with Misleading Investors
Litigation Release No. 24818 / May 14, 2020
Securities and Exchange Commission v. Ronald D. Swanson, No. 3:20-cv-00666 (D. Conn. filed May 14, 2020)
The Securities and Exchange Commission today charged the former chief executive officer and general counsel of a company purportedly developing a liquid purification technology with intentionally misleading investors from whom he solicited over $2 million between October 2012 and August 2015.
The SEC's complaint alleges that in late 2013 and early 2014, Ronald Swanson, then a resident of Connecticut, falsely told investors that his employer, Texas-based Sonic Cavitation LLC, was in discussions with a publicly-traded oil and gas company for a large order of Sonic Cavitation units, which supposedly implemented a liquid purification technology. According to the SEC's complaint, Swanson also falsely told current and prospective investors that the oil and gas company was poised to acquire a 10%-12% equity interest in Sonic Cavitation LLC, despite knowing that the oil and gas company's staff did not consider Sonic Cavitation's technology to be viable. Further, Swanson allegedly misrepresented the liquid purification technology's testing history, capabilities, and performance in real-life applications, such as falsely stating that an independent research and development company had verified the technology's practical use, when in fact the research and development company found that the technology did not work as Swanson claimed.
The SEC's complaint, filed in U.S. District Court in the District of Connecticut, charges Swanson with violating the antifraud provisions 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 SEC seeks a permanent injunction, penalties, disgorgement of ill-gotten gains plus interest, and a bar from serving as an officer of director of a public company. On May 14, 2020, the SEC ordered that Swanson be forthwith suspended from appearing or practicing before the Commission pursuant to Rule 102(e)(2) of the Commission's Rules of Practice, based on his disbarment from the District of Columbia bar.
The SEC's case is being handled by Dawn Edick, Marc Jones, Rua Kelly, and Amy Gwiazda of the Boston Regional Office. The case followed an examination in a related matter conducted by Maria Pimentel Viana and Kenneth Leung of the Boston Regional Office. The SEC appreciates the assistance that the District of Columbia Bar's Office of Disciplinary Counsel provided in this matter.