FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today charged a pair of penny stock promoters in Canada with manipulating two microcap stocks to create the false appearance of market interest.
The SEC alleges that Mike Taxon and Itamar Cohen distributed promotional mailings of glossy “newsletters” with fake publication names like “Stock Trend Report” and “Global Investor Watch” in order to tout the stocks of purported gold and silver exploration company Raven Gold Corporation (RVNG) and natural gas production company Kentucky USA Energy (KYUS). The newsletters misled investors with purportedly positive – but fake – price and volume trends for these stocks and other false information about the promoters’ identity, compensation, and control of the stock. In reality, most of the touted market activity was generated by Taxon, Cohen, and their associates who controlled large blocks of the companies’ stocks. Earlier this week, the SEC charged attorney Adam Gottbetter for his role in the scheme involving Kentucky USA Energy stock.
In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Taxon and Cohen.
“Taxon and Cohen lured investors to these stocks by depicting the illusion of an active market and positive market trends,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.
The SEC’s complaint filed in federal court in New Jersey alleges that Taxon and Cohen violated Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
Taxon and Cohen agreed to partial settlements of the SEC’s charges, with monetary sanctions to be determined by the court at a later date. They consented to the entry of a judgment enjoining them from future violations and barring them from participating in penny stock offerings. The partial settlements are subject to court approval.
The SEC’s investigation has been conducted by Simona Suh of the Market Abuse Unit and Nancy A. Brown and Elzbieta Wraga of the New York office. The case is being supervised by Amelia A. Cottrell and Michael J. Osnato Jr. The SEC appreciates the assistance of the Newark Field Office of the Federal Bureau of Investigation, the U.S. Attorney’s Office for the District of New Jersey, and the Financial Industry Regulatory Authority.
Showing posts with label MICROCAP STOCKS. Show all posts
Showing posts with label MICROCAP STOCKS. Show all posts
Monday, June 1, 2015
Thursday, September 11, 2014
TWO CHARGED BY SEC FOR ROLES IN OFFSHORE MONEY LAUNDERING SCHEME
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission charged two individuals managing an offshore business intended to help clients evade U.S. securities laws with concealing the ownership of certain microcap stocks as part of a larger money laundering scheme alleged by criminal authorities.
Under the federal securities laws, beneficial owners of more than 5 percent of certain stocks are required to report their acquisition and ownership of those stocks to the SEC and the investing public. The SEC alleges that Belize residents Robert Bandfield and Andrew Godfrey through a company called IPC Corporate Services have helped clients who own significant amounts of thinly-traded microcap stocks avoid these reporting requirements. They created associated companies through which the clients could hide their ownership and spread the shares so that none of them contained more than 5 percent of the stock of any particular microcap issuer. They stressed to their clients the importance of staying below the 5 percent reporting threshold for each associated entity. However, because Bandfield and IPC owned the associated entities used in this arrangement, they assumed beneficial ownership of all the clients’ shares of these microcap stocks. Therefore, IPC and Bandfield were themselves required to report their beneficial ownership of more than 5 percent in each stock.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Bandfield and Godfrey for violations of other federal laws extending beyond the SEC’s purview.
“The federal securities laws provide investors the right to know when an individual or entity owns and controls more than 5 percent of a stock because purchases or sales by that major shareholder can have the potential to sway the stock price in one direction or another,” said Michael Paley, Co-Chair of the SEC Enforcement Division’s Microcap Fraud Task Force. “Bandfield with Godfrey’s assistance designed an offshore system to deliberately keep the rest of the market from knowing that someone owned significant amounts of particular stocks. In microcap stock schemes like these that extend even beyond securities laws violations, we will continue to work with criminal authorities to bring wrongdoers to justice for the full extent of their crimes.”
The Securities Exchange Act of 1934 and related SEC rules require beneficial owners of more than 5 percent of a class of stock of certain companies to file Schedule 13D or 13G. The SEC’s complaint charges IPC and Bandfield with repeated failures to make these filings, thus violating Section 13 of the Exchange Act and Rule 13d-1. Godfrey is charged with aiding and abetting those violations. The SEC’s complaint seeks monetary relief and permanent injunctions against IPC, Bandfield, and Godfrey.
The SEC’s investigation is continuing. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York, Federal Bureau of Investigation, Internal Revenue Service, and Financial Industry Regulatory Authority.
The Securities and Exchange Commission charged two individuals managing an offshore business intended to help clients evade U.S. securities laws with concealing the ownership of certain microcap stocks as part of a larger money laundering scheme alleged by criminal authorities.
Under the federal securities laws, beneficial owners of more than 5 percent of certain stocks are required to report their acquisition and ownership of those stocks to the SEC and the investing public. The SEC alleges that Belize residents Robert Bandfield and Andrew Godfrey through a company called IPC Corporate Services have helped clients who own significant amounts of thinly-traded microcap stocks avoid these reporting requirements. They created associated companies through which the clients could hide their ownership and spread the shares so that none of them contained more than 5 percent of the stock of any particular microcap issuer. They stressed to their clients the importance of staying below the 5 percent reporting threshold for each associated entity. However, because Bandfield and IPC owned the associated entities used in this arrangement, they assumed beneficial ownership of all the clients’ shares of these microcap stocks. Therefore, IPC and Bandfield were themselves required to report their beneficial ownership of more than 5 percent in each stock.
In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Bandfield and Godfrey for violations of other federal laws extending beyond the SEC’s purview.
“The federal securities laws provide investors the right to know when an individual or entity owns and controls more than 5 percent of a stock because purchases or sales by that major shareholder can have the potential to sway the stock price in one direction or another,” said Michael Paley, Co-Chair of the SEC Enforcement Division’s Microcap Fraud Task Force. “Bandfield with Godfrey’s assistance designed an offshore system to deliberately keep the rest of the market from knowing that someone owned significant amounts of particular stocks. In microcap stock schemes like these that extend even beyond securities laws violations, we will continue to work with criminal authorities to bring wrongdoers to justice for the full extent of their crimes.”
The Securities Exchange Act of 1934 and related SEC rules require beneficial owners of more than 5 percent of a class of stock of certain companies to file Schedule 13D or 13G. The SEC’s complaint charges IPC and Bandfield with repeated failures to make these filings, thus violating Section 13 of the Exchange Act and Rule 13d-1. Godfrey is charged with aiding and abetting those violations. The SEC’s complaint seeks monetary relief and permanent injunctions against IPC, Bandfield, and Godfrey.
The SEC’s investigation is continuing. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York, Federal Bureau of Investigation, Internal Revenue Service, and Financial Industry Regulatory Authority.
Thursday, March 13, 2014
SEC GETS ASSET FREEZE AGAINST MICROCAP STOCK PROMOTER
FROM: SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze against a promoter behind a platform of affiliated microcap stock promotion websites.
The SEC alleges that John Babikian used AwesomePennyStocks.com and its related site PennyStocksUniverse.com, collectively “APS,” to commit a brand of securities fraud known as “scalping.” The APS websites disseminated e-mails to approximately 700,000 people shortly after 2:30 p.m. Eastern time on the afternoon of Feb. 23, 2012, and recommended the penny stock America West Resources Inc. (AWSRQ). What the e-mails failed to disclose among other things was that Babikian held more than 1.4 million shares of America West stock, which he had already positioned and intended to sell immediately through a Swiss bank. The APS emails immediately triggered massive increases in America West’s share price and trading volume, which Babikian exploited by unloading shares of America West’s stock over the remaining 90 minutes of the trading day for ill-gotten gains of more than $1.9 million.
According to documents filed simultaneously with the SEC’s complaint in federal court in Manhattan, Babikian was actively attempting to liquidate his U.S. assets, which he holds in the names of alter ego front companies. He was seeking to wire the proceeds offshore. The Honorable Paul A. Crotty granted the SEC’s emergency request to preserve these assets by issuing an asset freeze order.
“The Enforcement Division, including its Microcap Fraud Task Force, is intensely focused on the scourge of microcap fraud and is aggressively working to root out microcap fraudsters who make their living by preying on unwitting investors,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.
“By obtaining today’s emergency asset freeze, we have thwarted Babikian’s attempts to liquidate and expatriate assets that should be used to return his ill-gotten gains and pay appropriate penalties,” said Stephen L. Cohen, Associate Director of the SEC’s Division of Enforcement in Washington, D.C.
According to the SEC’s complaint, America West’s stock was both low-priced and thinly traded prior to Babikian’s mass dissemination of the APS e-mails promoting it. America West’s trading volume in 2011 averaged approximately 15,400 shares per day. There was not a single trade in America West stock on Feb. 23, 2012, before the touting e-mails were sent. However, in the immediate aftermath of Babikian’s e-mail launch, more than 7.8 million shares of America West stock was traded in the next 90 minutes as America West’s share price hit an all-time high. Absent the fraudulent touts, Babikian could not have sold more than a few thousand shares at an extremely lower share price.
The court’s order, among other things, freezes Babikian’s assets, temporarily restrains him from further similar misconduct, requires an accounting, prohibits document alteration or destruction, and expedites discovery. Pursuant to the order, the SEC has taken immediate action to freeze Babikian’s U.S. assets, which include the proceeds of the sale of a fractional interest in an airplane that Babikian had been attempting to have wired to an offshore bank, two homes in the Los Angeles area, and agricultural property in Oregon.
The SEC’s investigation, which is continuing, has been led by Andrew R. McFall, John P. Lucas, Robert W. Nesbitt and supervised by J. Lee Buck II. The case will be litigated by Matthew P. Cohen and Michael J. Roessner. The SEC appreciates the assistance of the Quebec Autorité des Marchés Financiers, Financial Industry Regulatory Authority, and OTC Markets Group Inc.
The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze against a promoter behind a platform of affiliated microcap stock promotion websites.
The SEC alleges that John Babikian used AwesomePennyStocks.com and its related site PennyStocksUniverse.com, collectively “APS,” to commit a brand of securities fraud known as “scalping.” The APS websites disseminated e-mails to approximately 700,000 people shortly after 2:30 p.m. Eastern time on the afternoon of Feb. 23, 2012, and recommended the penny stock America West Resources Inc. (AWSRQ). What the e-mails failed to disclose among other things was that Babikian held more than 1.4 million shares of America West stock, which he had already positioned and intended to sell immediately through a Swiss bank. The APS emails immediately triggered massive increases in America West’s share price and trading volume, which Babikian exploited by unloading shares of America West’s stock over the remaining 90 minutes of the trading day for ill-gotten gains of more than $1.9 million.
According to documents filed simultaneously with the SEC’s complaint in federal court in Manhattan, Babikian was actively attempting to liquidate his U.S. assets, which he holds in the names of alter ego front companies. He was seeking to wire the proceeds offshore. The Honorable Paul A. Crotty granted the SEC’s emergency request to preserve these assets by issuing an asset freeze order.
“The Enforcement Division, including its Microcap Fraud Task Force, is intensely focused on the scourge of microcap fraud and is aggressively working to root out microcap fraudsters who make their living by preying on unwitting investors,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.
“By obtaining today’s emergency asset freeze, we have thwarted Babikian’s attempts to liquidate and expatriate assets that should be used to return his ill-gotten gains and pay appropriate penalties,” said Stephen L. Cohen, Associate Director of the SEC’s Division of Enforcement in Washington, D.C.
According to the SEC’s complaint, America West’s stock was both low-priced and thinly traded prior to Babikian’s mass dissemination of the APS e-mails promoting it. America West’s trading volume in 2011 averaged approximately 15,400 shares per day. There was not a single trade in America West stock on Feb. 23, 2012, before the touting e-mails were sent. However, in the immediate aftermath of Babikian’s e-mail launch, more than 7.8 million shares of America West stock was traded in the next 90 minutes as America West’s share price hit an all-time high. Absent the fraudulent touts, Babikian could not have sold more than a few thousand shares at an extremely lower share price.
The court’s order, among other things, freezes Babikian’s assets, temporarily restrains him from further similar misconduct, requires an accounting, prohibits document alteration or destruction, and expedites discovery. Pursuant to the order, the SEC has taken immediate action to freeze Babikian’s U.S. assets, which include the proceeds of the sale of a fractional interest in an airplane that Babikian had been attempting to have wired to an offshore bank, two homes in the Los Angeles area, and agricultural property in Oregon.
The SEC’s investigation, which is continuing, has been led by Andrew R. McFall, John P. Lucas, Robert W. Nesbitt and supervised by J. Lee Buck II. The case will be litigated by Matthew P. Cohen and Michael J. Roessner. The SEC appreciates the assistance of the Quebec Autorité des Marchés Financiers, Financial Industry Regulatory Authority, and OTC Markets Group Inc.
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