SEC files insider trading charges years after iced tea company's 2017 blockchain 'pivot'

A now-infamous "pivot" from iced tea to blockchain tech that sent a publicly-traded company's stock soaring has years later resulted in insider trading charges against three individuals.

The Securities and Exchange Commission went public with its lawsuit on Friday, according to a press release, alleging that Eric Watson, Oliver-Barret Lindsay and Gannon Giguiere engaged in insider trading as part of the December 2017 announcement, which saw Long Island Iced Tea change its name to Long Blockchain.

As the SEC alleged in its release:

"According to the SEC's complaint, filed in the U.S. District Court for the Southern District of New York, Eric Watson, an undisclosed control person of Long Blockchain who helped drive this business change within the company and signed a confidentiality agreement not to disclose the company's business plans, tipped his friend and broker, Oliver Barret-Lindsay, of such plans, including by sharing with him a draft of the company's press release. Barret-Lindsay, in turn, allegedly passed the material nonpublic information on to his friend, Gannon Giguiere."

The regulator further alleged in court documents that Giguiere then used this information to buy 35,000 company shares. The stock price surge that followed Long's announcement -- coming at a time of heady cryptocurrency prices, weeks before bitcoin's price neared $20,000 -- resulted in a big swing in profit for Giguiere's purchase. 

"Within hours of receiving this confidential information, Giguiere purchased 35,000 shares of Long Blockchain stock. According to the complaint, the company's stock price skyrocketed after the press release was issued, spiking more than 380% intraday," the SEC said. "Within two hours of the announcement, Giguiere sold his shares for over $160,000 in illicit profits."

Quartz reported in the summer of 2019 that Long Blockchain had attracted the scrutiny of the FBI, which was said to have been investigating possible insider trading in connection with the name-change announcement and subsequent stock price bump.