FINRA goes after StockKings

The United States Financial Industry Regulatory Authority (FINRA) has filed a complaint against StockKings Capital LLC and its CEO Gregory Antonius Lewis.

In 2015, Lewis began raising funds for a business that he told potential investors would aggregate and analyze investor portfolios on a financial technology platform. In a series of unregistered, private securities offerings from 2015 through 2019, Lewis raised more than $2.7 million for this business. However, Lewis never launched this platform.

FINRA’s Department of Enforcement alleges that, in connection with his solicitation efforts, from November 2016 to December 2018, Lewis and the Firm created and transmitted investment materials that made false, exaggerated, misleading, promissory, and unwarranted claims about StockKings Holdings, Inc, StockKings Capital, and—the platform they were purportedly developing.

In these documents, Lewis and StockKings: falsely claimed they had received a patent; overstated the progress StockKings had made toward bringing its platform to market; falsely claimed the platform was stalled due to a FINRA materiality consultation; and made baseless and unwarranted valuation claims and revenue projections.

FINRA says that, as a result, StockKings Capital and Lewis violated FINRA Rules 2210(d)(1) and 2010.

Separately, from January 2017 through September 2019, Lewis used over $42,000 of StockKings Capital funds to pay for personal expenses. Lewis directed the Firm’s FINOP to misclassify those expenses as business expenses of the Firm. Due to this, Lewis caused the Firm to maintain inaccurate books and records, which were in turn used to create FOCUS reports that inaccurately understated Lewis’s compensation and overstated the Firm’s expenses.

By causing StockKings Capital to maintain inaccurate books and records, Lewis violated FINRA Rules 4511 and 2010. By failing to maintain accurate books and records, StockKings Capital willfully violated Section 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17a-3 and 17a-5 thereunder, and it violated FINRA Rules 4511 and 2010.

Finally, FINRA argues that StockKings Capital failed to make all of the required disclosures with respect to the intended use of proceeds, offering expenses, and the amount of selling compensation to be paid in its offering documents in 2015, 2018, and 2019 and, relatedly, failed to timely file offering documents with FINRA for three separate member private offerings in 2015, 2018, and 2019. As a result, StockKings Capital violated FINRA Rules 5122 and 2010.

The Department of Enforcement requests that the Panel order that that one or more of the sanctions provided under FINRA Rule 8310(a) be imposed, including that Respondents StockKings Capital and Lewis be required to disgorge fully any and all ill-gotten gains and/or make full and complete restitution, together with interest. FINRA also requests that the Penal make specific findings that Respondent StockKings Capital willfully violated Section 17(a) of the Exchange Act and Rules 17a-3 and 17a-5 thereunder.

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