Thursday, July 18, 2013

SEC Charges San Diego-Based Promoter in Penny Stock Scheme

The SEC charged a penny stock promoter in the San Diego area for fraudulently arranging the purchase of $2.5 million worth of shares in a penny stock company in an attempt to generate the false appearance of market interest and induce other investors to purchase the stock.

The SEC alleges that the promoter artificially increased the trading price and volume of iTrackr Systems stock when he conspired with a purported businessman with access to a network of corrupt brokers. What the promoter didn’t know was that the purported businessman was actually an undercover FBI agent. During a test run of their arrangement, the promoter paid a $3,000 kickback in exchange for the initial purchase of $14,000 worth of iTrackr shares.

In a parallel action, the U.S. Attorney’s Office for the Southern District of California today filed criminal charges against the promoter.

“[The promoter] tried to artificially inflate the price and volume of iTrackr shares to the detriment of retail investors who wouldn’t have known the real story behind the flurry of market activity,” said Michele Wein Layne, Director of the SEC’s Los Angeles Office. “Working with criminal authorities, we were able to stop [the promoter]’s misconduct before he could seriously impact the markets and harm investors.”

The SEC also has issued an order to suspend trading in iTrackr securities.

According to the SEC’s complaint filed in federal court in San Diego, the promoter set out to give the markets a false impression of supply and demand in iTrackr stock where none actually existed. He coordinated the purchase of iTrackr shares so the stock price could remain high enough for him to effectively promote it at a later date and artificially inflate the price even higher. [The promoter] arranged for the dissemination of promotional material that overstated the likelihood of iTrackr’s success and future profits.

For more information, visit SEC Charges San Diego-Based Promoter in Penny Stock Scheme.

The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attoreys. We have decades of experience in securities litigation matters, including the defense of enforcement actions. We represent firms and brokers nationwide. For more information contact Mark Astarita at 212-509-6544 or  by email

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