Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, March 20, 2007

SEC Charges Cyberkey Solutions with Securities Fraud

The Securities and Exchange Commission today announced a civil injunctive action alleging that a Utah-based corporation and its Chief Executive Officer made at least $1.5 million selling shares to investors while disseminating false claims of a lucrative purchase order from the Department of Homeland Security (DHS).

In its complaint, filed today in the United States District Court for the Eastern District of Pennsylvania, the Commission alleged that Cyberkey Solutions, Inc. of St. George, Utah, and its CEO James E. Plant, between November 2005 and the present, have engaged in an ongoing unregistered offering of Cyberkey shares, promoted with a series of false press releases describing a putative purchase order worth in excess of $24 million from DHS to buy Cyberkey’s flash memory drives. In fact, the Commission’s complaint alleges, Cyberkey had no business relationship at all with DHS. Additionally, according to the complaint, Cyberkey and Plant made other false statements to unsuspecting investors, including statements claiming Cyberkey had shipped products to DHS and received payments pursuant to the phony purchase order, and that Cyberkey was in the process of preparing and releasing audited financials.

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