SEC cracks down on Spear & Jackson pump-and-dump scheme
WINTER PARK, FLORIDA – The US Securities and Exchange Commission (SEC) alleges that Florida-based Park Financial Group and its principal, Gordon Cantley, aided and abetted and caused a pump-and-dump scheme involving the securities of Spear & Jackson. The company also failed to file required suspicious activity reports (SARs).
The SEC has begun administrative and cease-and-desist proceedings against the company and its principal. It has already obtained injunctive relief against Dennis Crowley, the former chief executive officer of Spear & Jackson, for violations of the anti-fraud, registration and reporting provisions of the federal securities laws in connection with his role in the pump-and-dump scheme in 2005.
A pump-and-dump scheme, also known as hype and dump manipulation, involves the touting of a company's stock through false and misleading statements to the market-place. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.
The cease-and-desist order alleges that between February 2002 and July 2003, Park, a registered broker-dealer with a disciplinary history, and Cantley executed numerous trades in Spear & Jackson stock, despite obvious red flags, for three companies located in the British Virgin Islands (BVI) Companies, which Crowley secretly controlled. Specifically, on several occasions, Crowley gave Park and Cantley sell orders for the BVI Companies' accounts. Park and Cantley filled these orders, even though each of these foreign-based accounts, which were rare for Park, required the written approval of at least two authorised individuals before any transaction could occur, and Crowley was not an authorised signatory.
Moreover, Park and Cantley executed Crowley's trades knowing he was the chief executive officer of Spear & Jackson, and that the BVI companies' accounts traded exclusively in Spear & Jackson stock, often buying and selling shares on a daily basis. Park and Cantley also knew that the BVI Companies were transferring large amounts of Spear & Jackson stock to a stock promoter, which was actively promoting Spear & Jackson, and Spear & Jackson's stock price was sharply increasing. During the relevant time period, Park and Cantley executed more than 200 trades in Spear & Jackson stock for the BVI Companies' accounts, which generated approximately $2.5 million in proceeds.
Park also failed to report suspicious transactions in Spear & Jackson stock by filing SARs with the Financial Crimes Enforcement Network, as required by regulations implementing the Bank Secrecy Act.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Hong Kong derivatives regime could drive more offshore booking
Industry warns new capital requirements for securities firms are higher than other jurisdictions
Will Iosco’s guidance solve pre-hedging puzzle?
Buy-siders doubt consent requirement will remove long-standing concerns
Responsible AI is about payoffs as much as principles
How one firm cut loan processing times and improved fraud detection without compromising on governance
Could one-off loan losses at US regional banks become systemic?
Investors bet Zions, Western Alliance are isolated problems, but credit risk managers are nervous
SEC poised to approve expansion of CME-FICC cross-margining
Agency’s new division heads moving swiftly on applications related to US Treasury clearing
ECB bank supervisors want top-down stress test that bites
Proposal would simplify capital structure with something similar to US stress capital buffer
Clearing houses warn Esma margin rules will stifle innovation
Changes in model confidence levels could still trip supervisory threshold even after relaxation in final RTS
BlackRock, Citadel Securities, Nasdaq mull tokenised equities’ impact on regulations
An SEC panel recently debated the ramifications of a future with tokenised equities