Compelo Banking is using cookies

We use them to give you the best experience. If you continue using our website, we'll assume that you are happy to receive all cookies on this website.

ContinueLearn More

SEC sues four penny stock purchasers for violating securities laws

The US Securities and Exchange Commission (SEC) has charged four securities industry professionals Danny Garber, Michael Manis, Kenneth Yellin, and Jordan Feinstein, for conducting a fraudulent penny stock scheme.

The market watchdog alleges that the accused purchased shares at nearly 30-60% off the market price, by misrepresenting to the penny stock firms that they would hold the shares for investment purposes and not re-sell them immediately.

According to the SEC’s complaint filed in federal court in Manhattan, the four fraudsters sold the shares immediately, without registering them and claimed bogus exemptions from the federal securities laws.

However, there was no such state law exemption applicable to their transactions, and they ran their scheme from 2007 to 2010, according to the federal agency.

SEC New York regional office director Andrew Calamari said, "These penny stock purchasers had enough securities industry experience to know that their penny stock trading was not exempt from the securities laws as they claimed."

"They repeatedly violated the registration provisions and in the process also committed securities fraud," Calamari added.

The SEC’s complaint sought all of the defendants to pay disgorgement, prejudgment interest and financial penalties; permanently enjoining all the defendants from future violations of the securities laws; as well as from participating in penny stock offerings.