SEC Files Charges Against Hemp Inc (OTCMKTS:HEMP)
On June 21 the Securities and Exchange Commission charged Hemp Inc (OTCMKTS:HEMP) and its CEO Mr. Bruce Perlowin with committing a long-running scheme to evade “the registration provisions of Section 5 of the Securities Act of 1933 in connection with securities issued by Hemp.” Among the defendants named in the complaint are also Mr. Perlowin’s brother, Mr. Jed Perlowin, his friend Mr. Barry Epling as well as certain private companies.
According to the SEC’s complaint hundreds of millions of unregistered Hemp shares have been sold to public investors. These vast amounts of shares were being distributed under bogus consulting deals or as gifts. Back in 2012, for example, a company connected to Mr. Epling received a total of 100 million Hemp shares as gifts in recognition of “affection and appreciation for over 20 years of friendship and loyal assistance.” Two days after the company received the last of these shares it got another gift – 40 million shares directly from Mr. Bruce Perlowin for exactly the same reason. The SEC claims that the HEMP shares received by the companies were then sold with a significant portion of the proceeds being used for “the benefit of and at the direction of Bruce Perlowin and Hemp.”
Investor should keep in mind that back in 2014 HEMP found itself mentioned in another SEC complaint, although not as a defendant. Back then the SEC charged four individuals of illegally manipulating the securities of several microcap companies, one of which was Hemp Inc.
Not surprisingly the news about HEMP and its CEO getting charged by the SEC had a devastating effect on the stock. In a state of panic selling investors decided to shed their holdings as fast as possible resulting in nearly 100 million shares getting traded during yesterday’s session. For comparison, the previous session saw less than 4 million traded shares while the monthly average stands at 7 million shares. The relentless selling caused the ticker to slash 40% of its value for a close at $0.024 per share. If investors continue to dispose of their shares at the same rate HEMP might find staying in the double-zero price ranges to be quite difficult.
