The U.S. Securities and Exchange Commission (SEC) is sanctioning a Canadian lawyer for his alleged role in a scheme to mislead investors by hiding the fact that companies were paying for promotional articles to tout their securities.
In February 2024, U.S. authorities charged a securities analyst and investment newsletter writer, Jonathan William Mikula, and two U.S.-based associates for allegedly engaging in a conspiracy to secretly tout unregistered securities and over-the-counter stocks in articles published in the Palm Beach Venture newsletter, without disclosing that companies had paid for these promotions.
U.S. authorities alleged that between December 2019 and August 2022, Mikula was secretly paid to tout certain securities offerings in the newsletter, and that the companies raised millions from investors without disclosing that they had paid him to promote their securities.
Alongside the criminal charges against Mikula and his associates, the SEC also filed civil charges against him and various others, including a couple of the companies that paid for the promotional activity.
Now, the SEC has secured a final judgment in U.S. district court in central California against a resident of Canada, Sergio Damian Lopez, over his alleged involvement in helping to conceal promotional payments for two securities offerings.
In its complaint, the regulator alleged that Lopez helped funnel payments from two companies — Hightimes Holding Corp. and Cloudastructure, Inc. — to Mikula.
“These articles, as Lopez knew, falsely represented to would-be investors that neither the newsletter publishing the articles nor the authors received any compensation for their recommendation,” the SEC alleged in its complaint.
“These actions gave Hightimes and Cloudastructure investors the misleading impression that the recommendations were objective and independently formed, when really they were paid-for promotions,” it also alleged.
Without admitting or denying the allegations in the SEC’s complaint, Lopez consented to the entry of a final judgment, which requires the disgorgement of US$200,000 plus interest, imposes a penalty of US$115,231, and prohibits him from serving as an officer or director of a public company for three years.
Last year, Mikula and two other co-conspirators pleaded guilty to charges of criminal conspiracy to tout securities for undisclosed compensation, and Mikula also pleaded to a charge of touting securities for undisclosed compensation. They are scheduled to be sentenced in July.
Earlier this year, the founder and chairman of Hightimes, Adam Levin, pleaded guilty to one count of conspiracy to tout securities for undisclosed compensation. The SEC also settled actions against both of the companies that paid for the secret promotions.
In 2024, it also settled with another alleged middleman in Mikula’s scheme — he was also required to disgorge his ill-gotten gains but avoided any penalties from the SEC based on his cooperation with the regulator.