SEC Survives Motion to Dismiss in "Long Island Iced Tea" Insider Trading Case

SEC Defeats Motion to Dismiss Brought by Tipper in Insider Trading Case

On June 30, 2025, the U.S. District Court for the Southern District of New York denied defendant Eric J. Watson’s motion to dismiss the SEC’s insider trading claim against him. The SEC’s complaint, filed on July 9, 2021, alleges Watson, who was an insider and controlling shareholder of Long Island Iced Tea Corp. (LTEA), tipped his business associate, defendant Oliver-Barret Lindsay, with material nonpublic information about LTEA’s forthcoming announcement that it was pivoting its business from soft drink manufacturing to blockchain technology.

According to the SEC’s complaint, Watson, a control person of LTEA who planned and executed LTEA’s purported pivot to blockchain, had signed a confidentiality agreement but ignored it, tipping Lindsay off to such plans, including by sharing a draft of the company’s press release announcing the change in business plans. Allegedly, Lindsay then passed the material nonpublic information on to his friend, defendant Gannon Giguiere, who, within hours of receiving this confidential information, purchased 35,000 shares of LTEA stock. According to the complaint, the company’s stock price skyrocketed after the press release was issued announcing the change in business plans, spiking more than 380% intraday. Within two hours of this announcement, Giguiere allegedly sold his shares for more than $160,000 in illicit profits.

Regulation by Non-Enforcement

There’s been an awful lot of talk about “regulation by enforcement” over the last few years, but the new trend seems to be regulation by non-enforcement. In both the crypto and FCPA spaces, the existence of longstanding precedent and applicable rules is apparently no longer sufficient to form the basis of an enforcement case. Instead, cases are dropped for unexplained “policy” reasons by the U.S. Securities and Exchange Commission, which one would hardly think provides the clarity and certainty that many claim to be seeking. If the laws and the rules provide outcomes the SEC doesn’t prefer, they should seek to change the laws and the rules, rather than undermine their own authority by declining to enforce them.

Old Flames

Just over a year ago, I suggested another tool for regulators to use in bringing our markets together. In a comment letter to the Bank of England and the Financial Conduct Authority on their consultation on a digital securities sandbox, I suggested a cross-border sandbox. […]

Much of my thinking about a potential sandbox has been in connection with crypto. Blockchain technology, given its early stage and potential for transforming the way our financial system and perhaps other systems work, is ripe for experimentation. The SEC’s Crypto Task Force has received written comment on the issue of sandboxes. The topic of fostering experimentation also comes up in some of the Task Force’s meetings with the public. Market participants are looking to experiment with bitcoin and other crypto assets, stablecoins, non-fungible tokens, digital identity solutions, collateral management, and tokenization of securities and assets such as real estate, among other issues. Blockchain allows for increased transparency, enhanced efficiency, lower costs, increased liquidity, and decentralization…. I head back to the US today with the hope that the Crypto Task Force can collaborate with the FCA in coordination with our domestic colleagues across the government and in the context of the Administration’s broader cooperation with the United Kingdom.

Samsung Leader Lee Jae-Yong Sheds Legal Woes After Yearslong Battle

Samsung Electronics chairman Lee Jae-yong, one of the most powerful individuals in the global tech industry, won a full reprieval Thursday in a protracted legal fight that overshadowed much of his time atop the South Korean conglomerate.

The 57-year-old Lee, who goes by Jay Y. Lee in the West, had faced a series of courtroom woes since he took the reins of Samsung from his then-ailing father in 2014. The following year a controversial merger of two Samsung affiliates—and the legal fallout from it—resulted in Lee’s twice imprisonment, a presidential pardon and years of trials.

On Thursday, South Korea’s Supreme Court ended his courtroom travails. It backed a pair of lower-court rulings that acquitted Lee of multiple criminal charges, including alleged accounting fraud and stock manipulation, regarding the 2015 merger of Samsung C&T and Cheil Industries. That tie-up strengthened the ownership stake held by Lee.

US Audit Board Chair’s Departure Opens Door to Oversight Reforms

The Trump administration has another shot to remake auditor oversight for the world’s largest capital market after months of debate over the future of the US audit regulator.

The impending departure of Erica Williams, chair of the Public Company Accounting Oversight Board, gives the Securities and Exchange Commission an opening to pick a new leader for the board. An agenda reset would likely follow, but the commission could make deeper reforms by replacing other members of the board or cutting its $400 million annual budget.