What's up guys and welcome back to wall street millennial on this channel, we talk about everything stocks and investing. Today we're going to talk about a recent case of insider trading caught by the sec. It involves a small iced tea company that made an announcement saying that they were switching their business to crypto when the announcement was made, the stock skyrocketed increasing by almost five times the perpetrators were able to take advantage of this pot by having bought stock. Shortly before the announcement and selling it within hours after, but that's no different than the majority of insider trading cases - in this instance, the perpetrators had a history of getting in trouble with the sec.

They had also run several incredibly involved pump and dump schemes where they took control of tiny companies and sold their worthless stock for millions of dollars. These serial fraudsters were eventually found out in all of their frauds, and most of them were thwarted by the sec before they could cash out in this video we'll go over exactly what these frauds were. The main characters in this series of frauds were gannon giguire and oliver barrett lindsay giguire is a 47 year old californian who is a professional stock promoter. He runs a dinky little website called themoneystreet.com, where he mainly does two things.

He writes about stocks that he's trying to pump and also writes about why investors should trust him. Despite the clean appearance of the site and the fact that has been around for many years most of the links on it don't work. Any reasonable person can tell it's a joke. Oliver barrett lindsay is a 44 year old canadian who ran a stock brokerage.

Despite working in brokerage services, he has never had any u.s security licenses and never registered with any regulators, but based on the methods he used to make money that might not come as a surprise. In 2016, giguire came up with a plot to make millions of dollars from a near worthless company. They either created or collaborated with a company called kvmd medical which supposedly made medical devices. The actual operations of the business are now defunct and likely were never even real.

The company did not trade publicly at the time, but giguire collaborated with the company to issue 3 million worthless stock. Iguide deposited half of the stock into an american brokerage account and his collaborator lindsay deposited the other half into his own cayman islands. Brokerage by matching their trades with one another, they were able to raise the market price of the stock and also sell to some of lindsay's clients without them. Knowing the matched trading created the market, illusion that there is activity and appreciable supply and demand in the stock geekwire also started promoting the stock, including using his website.

These factors resulted in being noticed by other market participants which in turn gave them the opportunity to dump their shares to outside investors. Over the course of several months, they were able to sell their stock for one and a half million dollars of illegal profits in 2017. They did a different pumpkin dump with another fake company. A supposed digital media company called asnt in this scheme.

A conspirator who is in control of the company issued 200 000 shares. The conspirator then sold her shares to the other traders, thereby getting her cut of the scheme. Then the others tried to promote the stock to the general public. Unfortunately, this didn't work out, so they then approached a corrupt stockbroker who offered to sell the stock to his own clients without the client's permission in exchange for a 30 kickback on the illegal profits, they ended up selling tens of thousands of stock in this way.

In a third pump and dump gigwhy acquired millions of shares of stock in a company called essi essi was a company in the cannabis industry that supposedly created technology and equipment for the industry. Giguire was able to lie about his affiliations with the company in order to deposit the shares into a brokerage and start selling them in the otc markets with his own promotion of the stock, including using his website. He promoted this talk to unsuspecting investors without disclosing that he was concurrently liquidating his own position. Other investors did not know that he was the single source of the majority of the stock trading on the market.

Through the scheme he was able to sell more than eight and a half million dollars worth of stock. In the end, the stock probably should have been completely worthless in 2018 giguire and lindsay were both charged by the sec for their pump and dumps. They both pled guilty and their cases are currently pending in court, but their biggest scam came in late 2017 and early 2018 when they targeted a legitimate company with stock trading on the nasdaq. That stock was long.

Island iced, tea, eric j watson was a corporate insider. At long island iced tea, he also controlled more than 30 of the company's stock watson had previously been a client of lindsay for things like brokerage services and promoting penny stocks that watson controlled. He approached lindsay to try to get lindsay's help in pumping the stock of long island. Ice-T lindsay then introduced watson to giguire who still operated the stock promotion website.

These three hence became close partners in their businesses as part of watson's desire to unlock value for himself from long island iced tea. He decided to pivot the company from the non-alcoholic beverage industry to the cryptocurrency industry. He convinced the rest of the company that this pivot should take place as the transition took place, watson signed confidentiality agreements committing to not disclose any insider information about the change. Despite this, he told lindsay all about the inner workings of the transition.

This included sending powerpoint presentations that the company would release. Finally, when the transition was finalized and the corporate announcement was written but not yet released, watson sent it to lindsay. He told lindsay that after the market sees the announcement, the stock may skyrocket from two and a half dollars to fifty dollars. A share instead of personally trading on the information lindsay relayed the information to geekwire.

The announcement was obviously going to be good for the stock, given the hyper on crypto at the time, but even giguire was wary of getting caught with the insider trading. At one point, he told lindsay that they need to be mindful regarding their promotion of the stock. Since the regulators were scrutinizing crypto deals that were being promoted at the time. Nevertheless, he asked lindsay to let him know when the announcement was imminent.

Finally, the announcement was ready to be released right before the release. Giguire bought 35 000 shares of long island tea. As expected on the announcement, the stock skyrocketed, the announcement stated that the company would be shifting its primary focus to the exploration of an investment in opportunities that leverage the benefits of blockchain technology. It would also change its name to long blockchain corporation on the announcement.

The stock's price and volume skyrocketed the stock nearly tripled in a single day, but giguire didn't wait to dump his stock only two hours after the announcement he sold all of his stock for a 160 thousand dollar profit. Unfortunately, for the insider traders, undercover fbi agents were involved the whole way throughout the pump and dump schemes. Undercover agents posed as the fraudulent brokerages that they used to dump their stocks in the insider trading with long island, t, fbi, agents and cooperating witnesses posed as other associates and were able to record phone calls and save text messages. In mid 2021, the sec was finally able to formally charge watson lindsay and gigwire with insider trading.

It's not entirely clear what exactly went on between those three watson was the true insider with long island tea and as a 30 shareholder held the most influence within the company, but he himself did not buy or sell any stock around the time that the company transitioned To crypto, instead, he seemingly gave away the insider information to lindsay, knowing that i would likely see the stock price increase many times, but even lindsay did not trade on it. He simply told giguire about the information. Geekwire was the only one who actually traded the stock. It might seem like watson and lindsay needlessly risk their own skin for giguire to profit from the information.

What seems more likely, though, is that the three of them colluded in private without putting anything on paper that they would collaborate on the scheme in order to reduce the chances of getting caught, they would relay the information two levels away from the actual insider then redistribute The profits after it was done, unfortunately, for them, the sec was already keeping tags on them due to lindsay and giguire's previous violations with their pump and dumps, because watson and lindsay technically did break the law even without trading they still were charged. They both had material non-public information and watson in particular, had a written obligation not to disclose it and that's how the sec was able to charge all three of them all right, guys that wraps it up for this video. If you enjoyed the content, make sure to smash the like button and subscribe, so you don't miss future uploads in the meantime. Thank you.

So much for watching and we'll see you in the next video wall street millennial signing out.