This happens every month:
“The dividend of $0.0667 per share of Series A Convertible Preferred Stock”
Those preferred stock holders should tell the CEO to stop that dividend if they don’t need it because it likely drags down the SP imo.
“1:15p ET 6/3/2022 - Dow Jones
SEC Charges Cannabis and SPAC Promoter With Fraud -- Barrons.com
By Bill Alpert
The Securities and Exchange Commission has filed a civil fraud complaint against Martin Sumichrast, alleging that the longtime promoter of small-stock offerings plundered an investment fund he managed, both for his personal benefit and to bolster a cannabis company that is now called cbdMD.
Barron's featured Sumichrast and cbdMD (ticker: YCBD), then called Level Brands, in a 2018 investigation of the small-stock offerings allowed under the SEC's Regulation A+, a rule rolled out after Congress had pushed the agency to make offerings easier for small business. We showed that in the first five years of such offerings, the average Reg A+ stock fell 16% in the six months after its debut, underperforming by 22% relative to the rising universe of small stocks.
Many Reg A+ initial public offerings were organized by veteran promoters like Sumichrast, whose record of poor-performing deals Barron's tracked back to the 1990s. Sumichrast didn't respond to attempts to reach him at the time of the 2018 report or following the SEC charges this week. As of Thursday, no filings listing attorneys for Sumichrast had appeared in the SEC case.
In the complaint, filed Tuesday in a Charlotte, N.C., federal district court, the SEC charges Sumichrast with six counts of fraud. The agency alleges that Sumichrast made unauthorized disbursements from an investment fund he managed, to enrich himself and also to subsidize cbdMD and dress up its financial statements for its RegA+ IPO.
Before it began selling the nonintoxicating cannabis product cannabidiol, or CDB, Sumichrast's company promoted brands affiliated with the onetime swimsuit model, Kathy Ireland. In an allegedly self-dealing transaction, the SEC charges, Sumichrast had the fund pay $475,000 for shares in a failing company, to fortify a men's lifestyle venture founded and operated by Ireland, cbdMD's "chief brand strategist."
Filings by cbdMD said its business was "materially dependent upon our continued relationship with kathy ireland(R) Worldwide, Ms. Ireland and her affiliates." but she wasn't an officer of Sumichrast's company and isn't named in the SEC fraud complaint. A representative for Ireland didn't respond to a request for comment.
In a statement Wednesday, cbdMD noted that the SEC fraud allegations mention dealings between Sumichrast and cbdMD, but don't allege wrongdoing by cbdMD. Since the SEC seeks to bar Sumichrast from serving as an officer or director of any public company, and Sumichrast is chairman and CEO of cbdMD, the company has formed a board committee to review the case's implications, it said.
CbdMD's press release said that Sumichrast has agreed to cooperate fully with the board's committee, "while focusing on executing cbdMD's commitment to remaining one of the nation's leading and most highly trusted and recognized CBD companies."
The SEC complaint also notes that cbdMD sponsored a special purpose acquisition company called Adara Acquisition (ADRA), which raised $100 million in a February 2021 IPO. Sumichrast was Adara's chief executive until Wednesday, when the SPAC announced he was resigning in light of the SEC charges. Like cbdMD, Adara lists on the New York Stock Exchange, where its shares were trading at $9.87 on Thursday.
When cbdMD came public as Level Brands in 2017, it was the largest Reg A+ offering ever, with its IPO at $6. The stock edged above $7 after the company rebranded itself cbdMD in 2019 to emphasize its CBD products. By 2022, it had subsided to penny stock levels. After this week's SEC complaint against Sumichrast, the stock slipped from Tuesday's opening price of 72 cents to a Friday price of 57 cents.
CbdMD is the second of the stocks featured in our 2018 Reg A+ examination to draw SEC attention. In 2019, the cryptocurrency firm Longfin and three affiliated individuals settled fraud allegations and disgorged $25 million.
Write to Bill Alpert at william.alpert@barrons.com
(END) Dow Jones Newswires
June 03, 2022 13:15 ET (17:15 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.”
my posts are always theory and not financial advice
