Attorney Prominent in the Crowdfunding Sector is Target of SEC Enforcement Action

The Securities and Exchange Commission (SEC) issued a litigation release today alleging charges of microcap fraud that involved an attorney prominent in the US crowdfunding sector.

According to the SEC complaint, Jillian Sidoti, affiliated with the law firm known as, facilitated alleged fraudulent dumping of securities of penny stock company Blake Insomnia Therapeutics.

According to the SEC complaint, as an attorney for Blake, Sidoti apparently drafted and signed documents that contained materially false information regarding the operations and control of Blake, including a private placement memorandum and registration statements filed with the Commission.

The SEC alleges that Sidoti then arranged to sell almost all of Blake’s stock to nominee shareholders to obscure that the shares were actually being sold to shareholders affiliated with Blake.

The complaint also alleges that Sidoti authored opinion letters containing false statements about the control of Blake in order to induce the transfer agent to remove restrictive legends from stock certificates held by the control group.

The SEC alleges that Sidoti’s actions enabled the control group to evade legal restrictions on the sales of stock by affiliates and sell over five million shares of Blake’s stock into the public market.

On January 2, 2020, the SEC charged 15 defendants in connection with a scheme that allegedly generated more than $35 million from illegal sales of stock of at least 45 microcap companies, including sales of Blake’s stock that Sidoti allegedly facilitated.


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