SEC Charges Microcap Stock Promoters
Last month, the Securities & Exchange Commission (SEC) charged a trio of alleged microcap stock promoters with defrauding investors by disseminating promotional investor relations e-mails and newsletters exhorting readers to immediately buy purportedly hot stocks so they could secretly sell their own holdings at a substantial profit.
The SEC alleges that the three men, who live in Israel, obtained shares in several penny stock companies and pumped the prices as high as 1,800 percent before dumping the shares for at least $2.8 million in illicit proceeds.
In one extravagantly positive promotional e-mail about a particular stock, they stated that a $5,000 investment could be worth more than $250,000 in two years. The men used numerous corporate identities and developed at least 20 different stock promotion websites to con investors into buying the stocks and causing the spikes in trading volume and share price that spurred their schemes.
The SEC’s complaint filed in federal court in Manhattan names Joshua Samuel Aaron (aka Mike Shields), Gery Shalon (aka Phillipe Mousset and Christopher Engeham), and Zvi Orenstein (aka Aviv Stein and John Avery). Aaron and Shalon allegedly wrote and designed the e-mails, Shalon allegedly disseminated them, and Orenstein allegedly provided essential operational support by handling brokerage accounts using numerous aliases.
Among the issuers named in the SEC complaint as subject to the improper investor relations activity are:
Greenfield Farms Grassfed Beef, Inc. (“GRAS”)
Southern Home Medical Equipment, Inc. (“SHOM”)
Next Generation Energy Corporation (“NGMC”)
Mustang Alliances, Inc. (“MSTG”)
In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges.
The SEC’s complaint charges Aaron, Sharon, and Orenstein with violating or aiding and abetting violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5. The SEC is seeking to bar them from the penny stock business and obtain their ill-gotten gains plus interest and financial penalties.
For further information, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real South, Suite 202 North, Boca Raton, Florida, (561) 416-8956, or [email protected]101.com. This securities law blog post is provided as a general informational service to clients and friends of Hamilton &Associates Law Group, P.A. 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.
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