Among recent enforcement actions were charges from the Securities and Exchange Commission against three penny stock promoters for defrauding investors and a settlement from three former Oppenheimer employees resulting from unregistered penny stock sales.
Meanwhile, the Financial Industry Regulatory Authority censured and fined a firm for failing to act on suspicious activities connected to Venezuelan bonds.
SEC Fines Ex-Oppenheimer Employees in Penny Stock Case
Three former employees of Oppenheimer & Co. have agreed to settle with the SEC on charges stemming from the unregistered sales of billions of shares of penny stocks on behalf of a customer. The actions are tied to another settled enforcement action against Oppenheimer in January, in which the broker-dealer admitted wrongdoing and paid $20 million to the SEC and the Treasury Department’s Financial Crimes Enforcement Network.
Scott Eisler, a former registered representative at Oppenheimer’s branch in Boca Raton, Florida, executed billions of penny stock shares in illegal unregistered distributions. His former branch manager and supervisor Arthur Lewis participated in, and in some cases approved, the sales.
Brokers who engage in a reasonable inquiry surrounding a proposed questionable sale by a customer do have an exemption from liability, but according to the agency, Eisler and Lewis failed to make the requisite inquiry despite substantial red flags associated with the sales.
Lewis’s supervisor Robert Okin, a former head of Oppenheimer’s private client division, was found, like Lewis, to have ignored red flags — thus failing in supervisory requirements.
Eisler agreed to pay a $50,000 penalty and be barred from engaging in penny stock sales or working in the securities industry for at least one year. Lewis agreed to pay a $50,000 penalty and be barred from working in a supervisory capacity in the securities industry for at least one year. Okin agreed to pay a $125,000 penalty and be barred from working in a supervisory capacity in the securities industry for at least one year. They each agreed to the settlements without admitting or denying the SEC’s findings.
SEC Charges 3 Microcap Stock Promoters With Fraud
The SEC has charged three microcap stock scammers living in Israel after they tried to defraud investors via promotional emails touting “hot” stocks so they could sell their own shares at a profit.
According to the agency, the three men, Joshua Samuel Aaron (aka Mike Shields), Gery Shalon (aka Phillipe Mousset and Christopher Engeham), and Zvi Orenstein (aka Aviv Stein and John Avery), got shares in several penny stock companies. Then, thanks to those promotional emails, they pumped the prices as high as 1,800% before dumping the shares for at least $2.8 million in illicit proceeds.