SEC and Telegram clash over disclosure of investor information

The regulator objects to Telegram's request to seal information identifying certain investors whose roles go beyond mere investment.

Proceedings before the U.S. Securities and Exchange Commission (SEC) against Telegram Group Inc. and TON Issuer Inc. for an unregistered $ 1.7 billion digital token offering continues before the New York Southern District Court . The latest developments in this case focus on the disclosure of information, the US regulator opposing an attempt by the defendants to seal certain information for investors.

On February 14, 2020, the SEC filed a letter with the Court in response to motions filed by the defendants Telegram Group Inc. and TON Issuer Inc. and nine third-party investors to seal or expunge parts of the exhibits or documents that the parties have submitted. to the Court in the context of their pending applications. In short, while defendants are pressuring for the sealing of a large amount of investor-related information, the SEC insists that some of this information should not be kept sealed as it are important to the case.

The SEC agrees to seal information identifying certain investors but not those whose role goes beyond mere investment, opposes sealing most of the business information involved and agrees to seal financial records under certain conditions.

The regulator notes that Telegram has proposed to delete investor identification information for all investors, including those who have played an additional role in Telegram's offering, for example, by marketing Grams to d & # 39; 39; others. Telegram also proposed to delete the identifying information of certain non-investor third parties who were otherwise involved in the offer or in the development of the TON blockchain.

The SEC opposes the deletion of the name of any investor or any non-investor third party that has engaged in additional activities, such as the marketing and sale of Grams or Gram interests or the development of applications for the TON ecosystem (including those whose efforts have been or are coordinated with Telegram).

According to the SEC, the communications and other actions of these investors or third parties are very relevant to questions relating to pending applications, in particular to show if the grams are securities and if the offer of Telegram can benefit from an exemption from registration under the Securities Act of 1933.

The SEC also submitted to the Court a list containing 24 names of third-party investors and non-investors whose behavior in the offer involved more than just an investment and summarizes their roles. Roles range from "involved in marketing and selling interest Grams" to "application development".

The SEC argues for disclosure. The regulator notes that none of these investors or third parties has decided to seal or redact their names or has expressed any interest in confidentiality – this is Telegram which seeks to protect their non-articulated "confidentiality" interests despite the fact that many of these entities have made public statements. by connecting them to Grams and Telegram. The identity of third parties on the list should therefore not be redacted, according to the SEC.

Recall that in a recently filed summary judgment motion, the SEC argued that it was entitled to a summary judgment in law on its claim that Telegram had made offers and sales of unregistered securities.

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