Litigation Release No. 24949 / October 19, 2020

Securities and Exchange Commission v. Jillian Sidoti, 20-CV-02178 (C.D. Cal. filed Oct. 19, 2020)

The Securities and Exchange Commission today charged California attorney Jillian Sidoti for her role in a fraudulent scheme to sell unregistered securities to the public.

The SEC’s complaint, filed in federal court in California, alleges that Sidoti facilitated the fraudulent dumping of securities of penny stock company Blake Insomnia Therapeutics. According to the complaint, as an attorney for Blake, Sidoti drafted and signed documents that she knew contained materially false information regarding the operations and control of Blake, including a private placement memorandum and registration statements filed with the Commission. As alleged in the complaint, Sidoti then arranged to sell almost all of Blake’s stock to nominee shareholders to obscure that the shares were actually being sold to shareholders affiliated with Blake. The complaint also alleges that Sidoti authored opinion letters containing false statements about the control of Blake in order to induce the transfer agent to remove restrictive legends from stock certificates held by the control group. As alleged, Sidoti’s actions enabled the control group to evade legal restrictions on the sales of stock by affiliates and sell over five million shares of Blake’s stock into the public market.

On January 2, 2020, the SEC charged 15 defendants in connection with a scheme that allegedly generated more than $35 million from illegal sales of stock of at least 45 microcap companies, including sales of Blake’s stock that Sidoti facilitated.

The SEC’s complaint charges Sidoti with violating the antifraud provisions of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC seeks permanent injunctive relief, including a conduct-based injunction restraining Sidoti from providing legal services in connection with certain unregistered offerings, a penny stock bar, and a civil penalty.

The SEC’s investigation was conducted by Rebecca Israel, Kathleen Shields, Trevor Donelan, Eric Forni, Jonathan Allen, David Scheffler, J. Lauchlan Wash, Sheila D’Entremont, and Amy Gwiazda of the SEC’s Boston Regional Office.