SEC Charges Self-Described Bankers, Dishonest Brokers, and Microcap Company Executive in Pump-And-Dump Scheme
The Securities and Exchange Commission today 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…
Read MoreSEC Charges Seattle Firm and Owner With Misusing Client Assets for Vacation Home and Vintage Automobile
The Securities and Exchange Commission today charged the owner of a Seattle-based investment advisory firm with fraudulently misusing client assets to make loans to himself to buy a luxury vacation home and refinance a rare vintage automobile. An SEC investigation found that Dennis H. Daugs Jr. and Lakeside Capital Management LLC used assets from the portfolio of a senior citizen client to fund $3.1 million in personal loans without telling her or obtaining her consent. The loans were not in the best interest of the client and significantly favored Daugs, who provided no collateral, had no set pay-off dates, and…
Read MoreSEC Announces Charges in Scheme to Secretly Enable Lawbreakers to Run Microcap Company
The Securities and Exchange Commission today announced fraud charges against four individuals and a microcap company for concealing from investors that two lawbreakers ran the company. According to the SEC’s orders instituting administrative proceedings, the mission of Natural Blue Resources Inc. was to create, acquire, or otherwise invest in environmentally-friendly companies, including an initiative to locate, purify, and sell water recovered from underground aquifers in New Mexico and other areas with depleting water resources. What investors didn’t know was that two individuals with prior law violations – James E. Cohen and Joseph Corazzi – secretly controlled the operational and management…
Read MoreSEC Charges Ernst & Young With Violating Auditor Independence Rules in Lobbying Activities
The Securities and Exchange Commission today charged Ernst & Young LLP with violations of auditor independence rules that require firms to maintain their objectivity and impartiality with clients. Ernst & Young agreed to pay more than $4 million to settle the charges. The SEC’s order instituting a settled administrative proceeding finds that an Ernst & Young subsidiary lobbied congressional staff on behalf of two audit clients. Such lobbying activities were impermissible under the SEC’s auditor independence rules because they put the firm in the position of being an advocate for those audit clients. Despite providing the prohibited legislative advisory services…
Read MoreSEC, Massachusetts U.S. Attorney, and FBI Charge Five with Attempted Manipulation of Microcap Company
The Securities and Exchange Commission, the U.S. Attorney for the District of Massachusetts, and the Federal Bureau of Investigation today announced charges against five individuals whose attempt to manipulate shares of Boston-based Amogear Inc. was caught by an FBI undercover operation. According to the SEC and criminal cases filed in federal court in Boston, the defendants knew that Amogear was a shell company without any real operations, but schemed to boost its price and profit by selling their own shares. What the parties didn’t know was that the FBI controlled Amogear and used it to obtain evidence of attempted stock…
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