SEC Charges Boiler Room Operators in Florida-Based Penny Stock Manipulation Scheme

Jack Humphrey, Regulatory journalist
January 31, 2012 /

The United States Securities and Exchange Commission (Commission) has taken a civil action against First Resource Group LLC and its principal David H. Stern alleging that they fraudulently touted stock in two thinly-traded microcap companies, sold each company’s stock at the same time they were touting it, and manipulated the markets in both penny stocks in violation of the antifraud provisions of the federal securities laws.

According to the SEC’s complaint, at various times from December 2008 to May 2010 First Resource and Stern, and telemarketers they employed, fraudulently solicited brokers to purchase stock in TrinityCare Senior Living, Inc. and Cytta Corporation.

The complaint alleges that while First Resource and Stern were recommending the purchase of the securities of the two microcap companies, Stern sold First Resource’s shares of TrinityCare and Cytta unbeknownst to the investors who were purchasing the stocks, a practice known as scalping.

Further, the complaint alleges that while Stern was selling the stocks, he was also purchasing small amounts of the stocks in order to create the false appearance of legitimate trading activity to induce the investors to purchase shares in both companies. The SEC also alleges that Stern and First Resource acted as unregistered broker-dealers.

The SEC’s investigation is continuing.

 

Share your opinion