Nexus of Cross Border Penny Stock Operators – Duping Innocent Investors

  • SEC has levied charges against fraudulent persons for duping small Investors in penny stock schemes
  • Sixteen defendants have been charged
  • Illicit proceeds involved in the trade is more than $194 million
  • More than twenty countries supported SEC in investigation

The Securities and Exchange Commission announced charges against various persons for participating in multi-year fraudulent penny stock schemes. Sixteen defendants have been charged and the amount of illicit proceeds. involved in the trade is more than $194 million. Person charged are located in Bahamas, the British Virgin Islands, Bulgaria, Canada, the Cayman Islands, Monaco, Spain, Turkey, and the United Kingdom

Regulatory and enforcement agencies for more than twenty countries supported SEC in concluding its investigation including assistance from Securities Commission of the Bahamas, Cayman Islands Monetary Authority, the Cyprus Securities and Exchange Commission, the Financial Supervisory Authority of Denmark, Guernsey Financial Services Commission, Japan Financial Services Agency, Malta Financial Services Authority, Mauritius Financial Services Commission, Securities Commission of Serbia, United Kingdom Financial Conduct Authority and others

SEC charges highlights that several defendants played a variety of roles to accumulate the majority of shares in penny stocks through complex structures which were difficult to be unveiled including structures involving offshore nominee companies. SEC has alleged that in order to keep the identity concealed from regulator and stop detection, defendants have been frequently using encrypted text and phone applications. Multiple offshore accounts have been used for transacting in penny stock.   

Globally retail Investors have been lured to buy the penny stock due to exorbitant quick gains. Con actors have been exploiting the market vulnerabilities and duping small investors through enticing them to enter penny stock and exiting pre-positions at higher valuation. According to the SEC charges, the group of defendants have been operating across continents and have amassed significant positions in certain stocks. Alleged persons have been leveraging the power of social media for promoting motivated campaign, leading to trigger in demand and valuation of stocks and then exiting the stocks at significant profits via trading platforms in Asia, Europe and the Caribbean.

The SEC is proceeding to disgorge ill-gotten gains along with interest and seeking permanent injunctions against all the alleged persons.

Staff Galactik Views

Related articles