The U.S. Securities and Exchange Commission filed two litigation releases this week — charging three individuals with running a microcap pump-and-dump scam targeting retail investors, and levying a $15 million penalty on two others who operated an unregistered securities fraud scheme.
County Line Energy Microcap Fraud
On Tuesday this week, the SEC charged Jonathan Farber of New York, Aarif Jamani of British Columbia, Canada and Brian Keasberry of Nevada, with running a microcap fraud scheme.
The scheme allegedly involved the defendants gaining control of the shares of County Line Energy (OTC:CYLC), a small publicly-traded company based in California, and fraudulently created the appearance of active trading in the stock.
“In the first half of 2018, before the defendants allegedly launched their scheme, there was little (and sometimes no) trading in that stock,” the SEC said in Tuesday’s filing.
The SEC alleged Farber and Jamani gained control of County Line, buying and selling stock in accounts they controlled to give the appearance that it was being actively traded. They then promoted the company in an online campaign that would appeal to retail investors.
“Throughout their scheme, defendants allegedly concealed from investors their control and involvement in County Line’s management that should have limited the amount of stock they could sell under the federal securities laws,” the SEC alleged.
The defendants then sold a large amount of the stock they accumulated to retail investors, netting them around $5 million in profits.
Charging the three defendants under various sections of the Securities Act and Exchange Act, the SEC said it was seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interests, civil penalties, and penny stock bars and officer-and-director bars to all three.
Also Read: Morgan Stanley To Pay $249M Penalty In Block Trade Case: How Leaks Cost Blackstone, Oaktree Millions
Medsis Securities Offering Fraud: $16M Penalty Levied
The SEC announced on Tuesday that its complaint against Medsis International, a technology start-up, had been upheld, with the U.S. District Court of Massachusetts entering a final judgment and ordering the company to pay $15.9 million in disgorgement, prejudgment interest and civil penalties.
Co-defendents…
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