SEC Charges Texas Company, Former CEO with Alleged Fraud in Stock Offering

SEC Charges Texas Startup and Former CEO In Connection With Alleged Fraud in $4.2 Million Stock Offering

On February 19, 2026, the Securities and Exchange Commission charged Texas-based C-Hear, Inc. and its former CEO, Adena Harmon, with securities fraud, alleging that they made misleading statements that misrepresented C-Hear’s technology and concealed Harmon’s past criminal convictions. Harmon was also charged for allegedly making misrepresentations to investors in another company she controlled, Elite Performance Data Labs, LLC, and misappropriating investor funds in both C-Hear and Elite Performance.

According to the SEC’s complaint, between January 2019 and October 2023, C-Hear raised more than $4.2 million from at least 48 investors who purchased C-Hear stock. The complaint alleges that, during the offering, Harmon and other C-Hear representatives made materially misleading statements and omissions to investors by falsely claiming that C-Hear’s primary software product was in trials with third parties and that the federal government had tried and was unable to hack into one of C-Hear’s products, and failing to disclose that Harmon had been convicted of numerous financial crimes, including theft by check. Harmon is also alleged to have opened two bank accounts in C-Hear’s name without notifying the company, directed three investors to deposit their investment funds into these unauthorized accounts, and misappropriated approximately $641,000 of such funds for her personal benefit, including to pay personal expenses like shopping and to satisfy her outstanding criminal restitution order.

What Does the Supreme Court’s Tariffs Decision Mean?

Last Friday, the U.S. Supreme Court issued its much-anticipated ruling in the case challenging the tariffs President Trump imposed in reliance on the International Economic Emergency Powers Act (IEEPA). By a 6-3 majority, the Court ruled in Learning Resources v. Trump that the IEEPA does not authorize the President to impose tariffs. However, even though the Court has now ruled, questions and uncertainty remain. As discussed below, the continuing questions have important implications for companies’ tariff-related D&O risk. The Court’s February 20, 2026 opinion can be found here.

Reliance, Misplaced: Restoring the Text of the Antifraud Provisions of the Federal Securities Laws in SEC Enforcement Actions

Even though the antifraud provisions target fraud, for decades lower courts and the Commission have held that the Commission can establish violations of them without any evidence that anyone was misled. They have done so by concluding that, unlike common law fraud or fraud in equity, reliance is never an element in a Commission enforcement action. That position would have some purchase if the federal securities laws that Congress enacted said so. But they don’t. Instead, the idea traces back to snippets of dicta in a 1949 lower court opinion that was attempting to make a different point about a different topic, in a case where the Commission had in fact established reliance.

The Supreme Court has never adopted that categorical view, for good reason. The position that reliance is never relevant conflicts with the statutory text, the background principles against which Congress legislated, the structure of the federal securities laws, the expressed purpose of the antifraud provisions, and Supreme Court precedent. Instead, as this article explains, a straightforward reading of the text and application of now settled interpretative principles and Supreme Court precedent shows that the Commission must prove reliance to establish a violation of some (but not all) of the antifraud provisions of the federal securities laws.

DOJ Increasingly Wielding False Claims Act to Target Cybersecurity Misrepresentations

The U.S. Department of Justice is increasingly focusing its enforcement efforts under the False Claims Act on cybersecurity, an official recently confirmed, raising new compliance challenges for a wide range of contractors.

Deputy Assistant Attorney General Brenna Jenny, speaking last month at the American Conference Institute, noted a “significant upward trajectory” in cybersecurity FCA cases, a trend expected to continue. The Department of Justice recovered $52 million across nine FCA settlements over cybersecurity last year. […]

“Any time you have government funds that are going out that have some kind of cybersecurity requirement attached to them, the government could potentially try to enforce them” using the law, said Sara McLean, an Akin Gump Strauss Hauer & Feld partner who previously oversaw FCA investigations at the DOJ.

Winklevoss’ Gemini Gemini Risks a Hard Landing After Crypto Rout

Cameron and Tyler Winklevoss spent more than a decade building Gemini Space Station Inc. into one of crypto’s longest-running exchanges, among the first to secure major US regulatory approvals and a survivor of the industry’s repeated cycles of scandal and collapse.

Now, after a more than 40% plunge in Bitcoin erased the bull market that helped underpin the money-losing company’s growth plans, Gemini is testing just how fast it can reposition — with little margin for error.

Earlier this month, Gemini said it was axing as much as a quarter of its staff and exiting the UK, European Union and Australia entirely. This week, it parted with its chief operating officer, chief financial officer and chief legal officer, all in a single day. Its stock has fallen more than 80% from a post-listing high last year, collapsing its market value from a peak of almost $4 billion to under $700 million.