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by Mike Caswell

The U.S. Securities and Exchange Commission has won a summary judgment against Chip Rice, the Montana man accused of improperly selling shares of several listings, including 121 million shares of a Saskatchewan OTC Pink company. The SEC claimed that Mr. Rice unloaded $25.8-million worth of shares over a period of four years in multiple unregistered offerings. (All figures are in U.S. dollars.) He had acquired the stock through convertible note arrangements at a steep discount, the SEC said.

The decision against Mr. Rice is contained in a judgment handed down on Sept. 27, 2023, in federal court in Minnesota. The finding is one handed down summarily, or without a trial (which is done if the legal issues are readily resolved). The judge has not yet imposed any fines, with the decision dealing solely with the issue of liability. On that front, the judge has found Mr. Rice to have violated the SEC's registration requirements.

Wednesday's decision hinges almost entirely on technicalities that will be of more interest to lawyers than investors. The SEC said that Mr. Rice bought and sold newly issued shares without registering as a broker or dealer. Those who buy and sell securities for a business must register as a dealer or associate themselves with a registered dealer, the SEC claimed. As part of that registration process, they must disclose their backers, regulatory histories and financial information, among other things. Mr. Rice did none of those things.

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