ADMINISTRATIVE PROCEEDING
File No. 3-21741; 3-21743

The Securities and Exchange Commission today announced charges against Hightimes Holding Corp. and Cloudastructure, Inc. for their involvement in separate fraudulent schemes to promote securities offerings that Hightimes and Cloudastructure were conducting pursuant to Regulation A, which, if certain conditions are met, provides an exemption to the Securities Act's registration provisions. Hightimes and Cloudastructure have agreed to settle the SEC charges.

This is the second set of actions that the SEC has filed in connection with this fraudulent promotional scheme. In September 2022, the SEC filed a complaint against Jonathan William Mikula, a recidivist securities law violator, alleging that he promoted the securities of Reg A issuers, including Hightimes and Cloudastructure, without disclosing his receipt of compensation for the promotions. As alleged, Mikula promoted the securities through Palm Beach Venture, a newsletter for which he served as an author and chief analyst, and presented the recommendations as unbiased and not paid for, while he was secretly compensated in the form of cash and lavish entertainment expenses. The SEC litigation is continuing against Mikula, as well as his associate Christian Fernandez, who allegedly acted as a middleman for the promotional scheme. The SEC today also announced the filing of settled federal injunctive actions against Hightimes Executive Chairman Adam Levin and Cloudastructure Chief Executive Officer Rick Bentley for their involvement in the scheme.

In its orders, the SEC found that Hightimes participated in the fraudulent promotion of its securities between at least April 2020 and August 2021, and Cloudastructure participated in the fraudulent promotion of its securities between at least September 2020 and mid-2021. According to the SEC orders, the companies participated in the fraudulent promotions of their securities by concealing payments to Mikula through middlemen acting on his behalf, and lavishly entertaining Mikula, in exchange for promotion by Mikula in the Palm Beach Ventures newsletter. The orders further find that Hightimes and Cloudastructure made material misrepresentations and omissions to investors in connection with their offerings. The SEC's order against Hightimes also finds that it engaged in an offering that was unregistered and not covered by a valid registration exemption between June 2020 and December 2022.

The SEC's order against Hightimes finds that it violated Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 5 and 17(a) of the Securities Act of 1933. Without admitting or denying the findings in the order, Hightimes agreed to a cease-and-desist order and to pay a penalty of $558,071.

The SEC's order against Cloudastructure finds that it violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act. Without admitting or denying the findings in the order, Cloudastructure agreed to a cease-and-desist order and to pay a penalty of $558,071.

The SEC's investigation was conducted by Yolanda Ochoa and Sarah Nilson, with assistance from Charles Canter and Dora Zaldivar. The case was supervised by Finola Manvelian. The SEC's investigation is ongoing.