James Roland Jones charged as the SEC enters the “Dark Web”

The Securities and Exchange Commission has charged James Roland Jones for selling what he called “insider tips” on the dark web.

This is the SEC’s first enforcement action involving alleged securities violations on the dark web.

The alleged fraudulent scheme started in late 2016 and lasted for nearly a year. Mr. Jones accessed various dark web marketplaces, including an “insider trading forum”, in search of material for his own securities trading.

In order to gain access, Mr. Jones lied about possessing material, nonpublic information. His time inside the forum didn’t last long and he was unsuccessful in obtaining valuable material, but then he devised a scheme to sell purported insider tips to others on the dark web, the complaint alleges.

The SEC argues that James Roland Jones “offered and sold on one of the dark web marketplaces various purported “insider tips” that he falsely described as material, nonpublic information from the insider trading forum or corporate insiders”.

The complaint alleges several users paid Bitcoin to purchase Mr. Jones’ tips and ultimately traded based on his false information.

David L. Peavler, Director of the SEC’s Fort Worth Regional Office, said: “This case shows that the SEC can and will pursue securities law violators wherever they operate, even on the dark web. We have committed staff and technology to pierce the cloak of anonymity these wrongdoers try to throw over their crimes.”

Mr. Jones is charged with violating the antifraud provisions of the federal securities laws. He has already agreed to a bifurcated settlement that permanently enjoins him from further violating these provisions, and reserves the determination of disgorgement and civil penalties for a later date.

The U.S. Attorney’s Office for the Middle District of Florida has filed criminal charges against Jones, in a parallel action.