Ontario’s Capital Markets Tribunal will hold a hearing with the former head of a tech company accused of misleading investors to capitalize on the hype for non-fungible tokens (NFTs) in 2021.
On March 8, the tribunal will consider a proposed settlement between the Ontario Securities Commission (OSC) and Raymond Pomroy, the former CEO of SoLVBL Solutions Inc., amid allegations the company issued misleading news ahead of private placements that raised $4 million.
The allegations have not been proven.
According to the regulator’s allegations, the firm misled investors when it announced it had reached a deal with another company that would use SoLVBL’s technology to produce NFTs — announcements that generated positive buzz for SoLVBL before its private placements.
However, the OSC alleged, the announcements claimed the NFT deal had been signed with an international private company, when it was actually a new company incorporated and funded by SoLVBL insiders.
“The news releases created the misleading impression that SoLVBL was entering into a deal with an established international company, with multiple offices, previous business activity and established customers,” the OSC said.
The regulator also alleged the releases misled investors about the relationship between the companies and failed to disclose the close ties between the firms.
No work to produce NFTs was ever done, the OSC alleged: “Other than signing the licensing agreement that granted the exclusive license rights, no work was done on the NFT deal.”
Instead, the regulator alleged that investors’ money was used for other purposes, such as paying off debts to insiders, including salary that was owed to Pomroy.
“Public companies that issue false and misleading news releases regarding new business activity, particularly when dealing with popular trends such as NFTs, deprive investors of the ability to make informed investment decisions and result in harm or a risk of harm,” the OSC said in the allegations.
“It is vital that investors receive complete, factual and accurate information, especially in emerging sectors. Public companies in these sectors that promote and exaggerate their business in aspirational news releases may materially mislead investors,” it said.
The terms of the settlement will only be revealed if the agreement is approved.