The US Securities and Exchange Commission last Thursday filed an emergency enforcement action in federal court charging two New York men, Faisal Zafar and Sameer Thawani, with perpetrating an ongoing securities fraud over the Internet.
The complaint alleged that since late 2004 and as recently as March 2006, Zafar and Thawani engaged in a "pump and dump" scheme to manipulate the market for at least 24 thinly traded "microcap" or "smallcap" stocks.
The defendants made over $873,000 by purchasing the stocks, anonymously disseminating false information about the companies on popular Internet message boards, and then selling the stocks at artificially inflated prices.
According to the SEC, to deceive investors into buying these stocks, the defendants preyed on public fears about terrorism and international health epidemics, among other topics.
For example, after the London subway bombings and reports concerning a deadly "bird flu" virus, Zafar posted messages falsely stating that one issuer was receiving a contract from the Department of Homeland Security to improve security on New York City subways, and that another issuer was acquiring a company that produces "bird flu" vaccine.
Acting on the Commission's application for emergency relief, the United States District Court for the Eastern District of New York last week issued a temporary restraining order that, among other things, froze the defendants' assets and set a date for a hearing on the Commission's motion for entry of a preliminary injunction against further violations and other relief while the action is pending.
Mark K. Schonfeld, Director of the Commission's Northeast Regional Office, announced that:
"Today's action underscores the Commission's continued vigilance against all forms of fraud involving the microcap market. Investors who participate in this segment of our capital markets are entitled to know that the securities laws will be vigorously enforced against all violators."
.
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment