SEC Charges Firms, Individuals with Microcap Fraud
The Securities and Exchange Commission has charged 3 firms and 8 individuals with securities fraud for pumping and dumping the securities of microcap firms through spam e-mail campaigns.
The anomalous international microcap stock scheme worth $33 million has been devised by Francis Tribble, a U.S. citizen and former stock promoter, How Wai Hui, a dual citizen of Hong Kong and Canada and the former CEO of China World Trade Corp., Kwong-Chung Chan, a citizen and resident of Hong Kong and the former CFO of China World Trade Corp., Gregg Berger, a stockbroker from Yonkers, New York, and four others. Also named defendants were the firms China Digital, Global Peopleline, and m-Wise.
The defendants have violated the anti-fraud and registration provisions and consented to the settlements entered by the SEC.
In a lawsuit filed before the U.S. District Court for the Eastern District of Michigan, the SEC said from January 2005 to December 2007, the defendants had paid false spam e-mail campaigns to raise the price and volume of securities of the companies involved in the case.
Investors were subsequently attracted into the market, driving the demand for stocks up through misstated and “non-existent IPOs and acquisitions” that presented “an unrealistic picture of the companies’ business prospects.” After which, the defendants dumped millions of shares from these securities into the touted market through nominee brokerage accounts that they opened with Berger.
The U.S. Department of Justice has also charged Berger in a parallel settlement for his involvement in the microcap fraud.