Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, June 5, 2012

SEC Charges Penny Stock Companies and Promoters in Florida

The SEC charged several penny stock companies and their officers as well as three penny stock promoters involved in various stock schemes in which bribes and kickbacks were paid to hype microcap stocks and illegally generate stock sales.  These charges are the latest in a series of cases in which the SEC has worked closely with the U.S. Attorney's Office for the Southern District of Florida and the Federal Bureau of Investigation to uncover penny stock schemes.

According to the SEC's complaints, some of these latest schemes involved the payment of undisclosed kickbacks to a pension fund manager in exchange for the fund's purchase of restricted shares of stock in the various microcap companies. Other schemes involved an undisclosed bribe that was to be paid to a stockbroker who agreed to purchase a microcap company's stock in the open market for his customers' discretionary accounts.

The U.S. Attorney's Office today announced criminal charges against the same individuals facing SEC civil charges.

The SEC is seeking financial penalties, disgorgement of ill-gotten gains plus prejudgment interest, and permanent injunctions against all the defendants.

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