Longfin settles fraud charges with the SEC

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Last summer, fintech company Longfin found itself in the crosshairs of the U.S. Securities and Exchange Commission’s (SEC) big guns. The commission had accused the company and its CEO, Venkata S. Meenavalli, of fraud in conjunction with its 2017 public offering after it had been determined that certain documents had been falsified. The drama surrounding the ordeal lingers, but the SEC has just issued an update and has announced that Meenavalli has agreed to pay a substantial fine in order to put the case behind him. He is expected to hand over $400,000 to the SEC in disgorgement and penalties, on top of the $26 million the commission already took from the company.

Meenavalli is to disgorge $159,000, which equals the salary he was paid as Longfin CEO, and interest of $9,000. He will also have to pay $232,000 as a civil penalty and will have to surrender all stock in the company. Additionally, he will be forbidden permanently from accepting any position as a director or officer of a public company and will be enjoined from participating in the sale or offer of any penny stocks.

These payments are just the latest to hit Meenavalli’s pocket. Last August, Longfin was forced to pay $284,139 in civil penalties and Meenavalli had to shell out $28,416 for the same. All of the money collected to date, and any subsequent money, will be allocated to a special SEC fund designed to reimburse investors wherever possible.

The SEC’s Anita B. Bandy says in its statement, “As alleged in our complaint, Meenavalli abused the Reg. A+ process to conduct a fraudulent offering, list Longfin on Nasdaq, and entice investors with falsified revenue. The SEC staff’s quick actions exposed the full scope of Meenavalli’s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future.”

Longfin had been accused of lying to investors about the amount of money it had collected. In exaggerating the claims, it was attempting to build up more confidence and attract more funds, but the entire operation, according to the SEC, was a sham.

Meenavalli still isn’t going to be able to put the case behind him completely. The U.S. Attorney’s Office for the District of New Jersey is still looking into any possible criminal charges that could be brought against him, and the SEC is still investigating the company and its actions, as well. More penalties, and possibly jail time, could be assessed in the future.