By Natalie DeCoste
On Sep. 13, the Securities and Exchange Commission (SEC) charged three media companies with conducting illegal securities offerings resulting in a significant payout.
The three media companies, New York City-based GTV Media Group Inc. and Saraca Media Group Inc., and Phoenix, Arizona-based Voice of Guo Media Inc., were all charged with conducting an illegal unregistered offering of GTV common stock.
According to the SEC’s press release on the matter starting in April through June 2020, the companies generally solicited thousands of individuals to invest in the GTV stock offering. During the same time period, GTV and Saraca solicited individuals to invest in the digital asset offering. The information on the offerings was made available to the general public through publicly available videos on GTV’s and Saraca’s websites, in addition to videos on popular social media platforms such as YouTube and Twitter.
Between the two offerings, the three companies collectively raised approximately $487 million from more than 5,000 investors, including U.S. investors. However, the companies did not file registration statements for either offering. These offers and sales did not qualify for an exemption from registration.
“Issuers seeking to access the markets through a public securities offering must provide investors with the disclosures required under the federal securities laws. When they fail to do so, the Commission will seek remedies that make harmed investors whole, such as an unwinding of the offering and a return of the funds to the investors,” said Sanjay Wadhwa, Deputy Director of the SEC’s Enforcement Division.
As a result of their illegal actions, the three companies agreed to pay more than $539 million to settle the SEC’s action. The settlement means that the companies neither admit nor deny the SEC’s findings that they violated Section 5 of the Securities Act of 1933.
“Thousands of investors purchased GTV stock, G-Coins, and G-Dollars based on the respondents’ solicitation of the general public with limited disclosures. The remedies ordered by the Commission today, which include a fair fund distribution, will provide meaningful relief to investors in these illegal offerings,” said Richard R. Best, Director of the SEC’s New York Regional Office.
Broken down, the settlement means that GTV and Saraca agreed to a cease-and-desist order. The companies will also pay disgorgement of over $434 million-plus prejudgment interest of approximately $16 million on a joint and several basis and a civil penalty of $15 million. Meanwhile, Voice of Guo also agreed to a cease-and-desist order to pay disgorgement of more than $52 million-plus prejudgment interest of nearly $2 million and to pay a civil penalty of $5 million. The money will be put into a Fair Fund to return monies to injured investors.
One of the companies implicated in the settlement, GTV Media, is also reportedly linked to former White House chief strategist Steve Bannon. The Wall Street Journal reported last year that the SEC was looking into fundraising tactics by the company and noted at the time that Bannon was a company director. Bannon was not named in the SEC settlement.
Additionally, Voice of Guo is linked to the wealthy Chinese exile Guo Wengui, on whose yacht Bannon was arrested. In August, investors sued Guo in a class-action lawsuit over GTV Media for allegedly breaking securities laws.