SEC Charges Four With Securities Fraud

Securities Fraud

Securities Lawyer 101 Blog

On December 21, 2012, securities fraud charges were announced against Danny Garber, Michael Mannis, Kenneth Yellin and Jordan Feinstein as well as 12 corporate egos with conducting a fraudulent penny stock scheme.  The SEC alleges that from the years 2007 through 2010, the defendants acquired more than a billion shares of unregistered stock in multiple microcap issuers at huge discounts, and then dumped the shares into the public markets receiving approximately $17 million in profits.

In the securities fraud complaint, the SEC alleges that the defendants acquired unregistered shares at about 30 to 60 percent less than the market price by misrepresenting to the penny stock companies that they intended to hold the shares for investment purpose.  According to the SEC, the defendants immediately sold the shares publicly while falsely claiming they were able to rely on state law exemptions from registration. To create the appearance that the purported exemptions were available, the defendants created virtual corporate presences in Minnesota, Texas, and Delaware.  It is common in penny stock securities fraud schemes for the participant to mislead or locate a corrupt or incompetent securities attorney to render baseless legal opinions that cause the issuers transfer agents to issue improperly free trading shares.

In selling the unregistered shares to the public, the SEC alleges that the defendants committed securities fraud by offering and selling their shares to unsuspecting investors.  The SEC’s securities fraud action was filed in the U.S. District Court for the Southern District of New York, alleging violations by Garber, Manis, Yellin, Feinstein and the named entities of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933; Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The SEC’s securities fraud complaint seeks a final judgment, among other things, ordering all of the defendants to pay disgorgement, prejudgment interest and financial penalties; permanently enjoining all the defendants from future violations of the securities laws; and permanently enjoining all the defendants from participating in penny stock offerings.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton, Florida, (561) 416-8956, by email at [email protected] or visit  www.securitieslawyer101.com.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. Please note that the prior results discussed herein do not guarantee similar outcomes.

Hamilton & Associates | Securities Lawyers
Brenda Hamilton, Securities Attorney
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com