US SEC Sues Former Head of Global Tech for Issuing Shares to His Family

The US Securities and Exchange Commission has filed a lawsuit in federal court in the Southern District of New York, case number 26-cv-08713, against David Reichman, former CEO and Chairman of Global Tech Industries, according to an official disclosure issued by the SEC.

In its complaint, the SEC alleges that over several years Reichman coordinated a scheme under which the company issued tens of millions of shares to his family members, friends, and acquaintances, while disclosures described these issuances as "for services," implying an ostensibly commercial transaction.

His daughter, Justine Reichman, was named in the lawsuit as a relief defendant, a legal term for a person who is not accused of committing the violation itself but is required to return funds tied to alleged misconduct. This designation is typically used to recover the value of shares or amounts transferred to parties who did not participate in the alleged scheme.

The SEC seeks injunctions, civil penalties, and disgorgement of profits with prejudgment interest from Reichman, in addition to banning him from serving as an officer or director of public companies. No rulings have been issued in the case so far, and the charges remain unproven allegations prior to the court reviewing the facts.

What do these terms mean?

Relief Defendant: A person not charged with a violation but required to return funds connected to it. Disgorgement: Forcing a violator to give up ill-gotten gains. Officer and Director Bar: Prohibiting an individual from serving as an executive or board member of a public company. Disclosure: Statements that a public company is required to publish regarding its financial position and decisions.