Tuesday, November 2, 2010
The SEC charged a Southern California businessman, Javeed Matin, with engaging in a scheme to pump up the stock of his former apparel company, Veltex Corp. The Commission's complaint alleges that, beginning in at least 2006 through August 2008, Matin perpetuated a "pump and dump" scheme in which he arranged for a company to acquire newly issued shares of Veltex, made false representations about Veltex's business prospects, and then caused the company to sell its shares into the resulting market. According to the complaint, while Matin was Veltex's CEO, he funneled about 10.5 million Veltex shares in an unregistered offering to a company he controlled, Wilshire Equity, Inc. The complaint further alleges that Matin enlisted a figurehead over Wilshire, Mazhar Ul Haque, who immediately resold Veltex shares to the public at Matin's direction. The complaint also alleges that Matin contemporaneously touted Veltex by issuing a series of false and misleading press releases grossly inflating Veltex's revenues, embellishing its overseas operations, and assuring investors that Veltex's financial statements were being audited. The complaint alleges during this time Veltex's stock price fluctuated between $0.33 and $3.30 and that Matin generated approximately $6.5 million from the sale of Veltex shares through Wilshire.