Matthew Brown Settles Penny Stock Manipulation Charges

Jack Humphrey, Regulatory journalist
July 26, 2012 /

Chief Judge Gregory M. Sleet of the United States District Court for the District of Delaware entered a final judgment against Defendant Matthew W. Brown on July 2, 2012 in SEC v. Dynkowski, et al., Civil Action No. 1:09-361, a stock manipulation case the SEC filed on May 20, 2009, and amen

ded on March 25, 2010 and December 22, 2011, to charge additional individuals. The SEC’s complaint alleges that Brown participated in market manipulation schemes involving the stock of GH3 International, Inc. and Asia Global Holdings, Inc.

As alleged in the complaint, the schemes generally followed the same pattern: Defendant Pawel P. Dynkowski and his accomplices agreed to sell large blocks of shares for penny stock companies in exchange for a portion of the proceeds. The shares were put in nominee accounts that Dynkowski and his accomplices controlled.

The defendants artificially inflated the market price of the stocks through wash sales, matched orders and other manipulative trading, often timed to coincide with false or misleading press releases, and then sold shares obtained from the issuers and divided the illicit proceeds.

As alleged in the complaint, Dynkowski orchestrated the manipulation scheme involving GH3 International, Inc. stock in 2006 with Brown, who operated a penny stock website called InvestorsHub.com.

The complaint alleges that in this scheme Dynkowski and Brown engaged in manipulative trading and that Brown helped coordinate this manipulative trading with issuance of false press releases. The complaint alleges that this scheme generated approximately $747,609 in illicit profits.

The complaint further alleges that in 2006, Brown planned the manipulation scheme involving the stock of Asia Global Holdings, Inc., with two defendants who were registered representatives at a small broker-dealer in California. As alleged in the complaint, Dynkowski and another defendant manipulated the price of Asia Global stock using wash sales, matched orders, and other manipulative trading, coordinated with false press releases.

After manipulating the price of the stock, the complaint alleges, Dynkowski, Brown, and others in this scheme sold 54 million shares that had been improperly registered on SEC Form S-8 and held in nominee accounts, generating over $4 million in illicit profits.

 

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