Rebranding your company with a few mentions of blockchain has been a surefire recipe for stock market success in recent months.
Kodak recently garnered a lot of attention from its announcement that it was launching an ICO and focusing on a blockchain solution to photo rights management, and Long Island Ice Tea decided to shift focus to blockchain technologies as part of its mission in “enhancing shareholder value.”
They succeeded in that goal, at least in the short term, when both their share prices jumped several hundred percent.
“Blockchain-R-Us” Business Models
Now it seems the Securities and Exchange Commission is getting wise to the move. SEC chair Jay Clayton gave a speech yesterday in which he announced that they were looking closely at communications from companies that “shift their business models” to make the most of the “perceived promise of distributed ledger technology”.
Clayton illustrated his point by outlining a hypothetical example of a company with “no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology.”
He said it could not be acceptable for such a company to “dabble in blockchain activities… change its name to something like ‘Blockchain-R-Us’, and immediately offer securities.” The nature and risks of those changes would have to be disclosed to investors in advance.
He also had advice for market professionals in the ICO space. US securities laws work on an assumption that participants will act responsibly and with personal integrity. According to Clayton, “from what I have seen recently, particularly in the initial coin offering (“ICO”) space, they can do better.”