Friday, July 25, 2014

SEC Charges Self-Described Bankers, Dishonest Brokers, and Microcap Company Executive in Pump-And-Dump Scheme

The SEC charged individuals who pocketed millions of dollars running an elaborate pump-and-dump scheme involving shares of a medical education company in Pennsylvania and two other microcap stocks. 

The SEC alleges that the stock market manipulation ring included two self-described bankers, a pair of dishonest brokers, and a corrupt company executive who issued misleading press releases.  The SEC today suspended trading in one of the microcap companies before they could illegally profit further.

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, the CEO and president of a purported merchant banking firm  teamed up with brokers and the CEO of a medical education company to inflate the price of the company’s stock and profit at the expense of the brokers’ customers.  They acquired 3 million restricted shares of the company's stock following its reverse merger into a public shell company in May 2013, and improperly flooded the market with the shares as though they were unrestricted.  They then engaged in a promotional campaign to hype the stock issuing materially misleading press releases that were sometimes edited.  
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