It is securities fraud to fail to disclose that articles and comments touting a company’s stock on investor websites were paid for by the company.
On Seeking Alpha on 16 Nov 2016, 04:35 PM DeepResearch707 posted:
Connecting the dots:
Jayme Stanley –> girlfriend of Craig Frigo
Craig Frigo –> brother of Sarah Rabby Frigo
Sarah Rabby Frigo –> Investor Relations for Medallion Financial
Is it is safe to assume StanleyJayme’s comments are being written by Andrew Murstein?
Is it acceptable (and/or legal) for management of a public company to be ANONYMOUSLY pumping their own stock?
DeepResearch707: excellent discovery!!!!
Don’t forget to file for an SEC whistleblower award.
The answer to your securities fraud question is evidenced in the arrest and prosecution of Richard St-Julien, former founder, chairman and majority shareholder of ForceField Energy (FNRG).
For the overlap between FNRG and MFIN please see my blog post published on December 3, 2015 titled:
Black Hat Smear Campaigns Intimidate Stock Critics
My post includes discussion of a Seeking Alpha article: A Rebuttal To The Bear Case On Forcefield Energy (FNRG) By Larry Meyers, PDL Capital Dec. 9, 2014
St-Julien was accused of scheming to manipulate FNRG’s stock price with help from stock promoters, broker dealers and a dermatologist in Boulder, Colorado, who bought shares on his behalf. St-Julien paid individuals who made the trades using a Belize-based firm and bank account. He was arrested while preparing to board a plane for Costa Rica. He could spend 25 years in prison.
Among other things, the company failed to disclose that reports touting the company’s stock on the investor website SeekingAlpha.com were paid for by the firm.
St-Julien and his conspirators orchestrated a PumpNDump scheme by creating the appearance of trading volume and genuine interest in FNRG driving the price from $4.55 to $7.82 from about January 2014 to April 2015, when he was arrested.
“St-Julien had a fiduciary responsibility to act in the best interest of ForceField and its shareholders. He did neither,” said Diego Rodriguez, Assistant Director-in-Charge of the FBI’s New York Field Office.
Brooklyn U.S. Attorney Loretta Lynch, now the U.S. Attorney General, said St-Julien “engaged in a stock trading scheme that was crafted on lies and deceit.”
The source of the quote below is the complaint filed by the SEC on May 3, 2016.
- In the first scheme, which took place between approximately October 2014 and April 2015, St. Julien hired defendant Mitchell, a purported “investor relations” professional, to pay cash kickbacks to the Registered Representative Defendants in return for their recommending and purchasing ForceField stock in their customers’ accounts. The Registered Representative Defendants, all of whom were registered with the Commission and associated with registered broker-dealers, did not disclose to their customers that they were being paid these cash kickbacks.
- In the second scheme, which took place between approximately June 2012 and January 2014, St. Julien paid kickbacks to defendant Castaldo—a former registered representative who was found liable by a jury in 2009 for violating the federal securities laws—for the latter’s successful solicitation of investors to buy ForceField stock in their personal brokerage accounts. Castaldo lured investors into investing in ForceField by first touting the company in an investment newsletter he sells to investors under the name of Wall Street Buy Sell Hold, Inc. (“WSBSH”). Although St. Julien paid Castaldo to tout ForceField in the WSBSH newsletter, Castaldo did not accurately disclose in the newsletter the amount of compensation he was being paid.
- Castaldo then solicited the investors who subscribed to the WSBSH newsletter to buy ForceField stock in their personal brokerage accounts. Castaldo advised these investors on the merits of investing in ForceField, but he did not disclose to them that St. Julien was paying him kickbacks of approximately 10% of the dollar amount of stock the investors bought.
- In the third scheme, which took place between approximately December 2009 and April 2015, St. Julien paid defendants Knippa and Petrossi, neither of whom was registered as a broker with the Commission, kickbacks in exchange for their successfully soliciting investments in ForceField’s private placements of common stock and warrants. Knippa and Petrossi solicited investors at, among other places, investment conferences they attended with St. Julien. Knippa and Petrossi advised potential investors on the merits of investing in ForceField, but they failed to disclose to these investors that St. Julien was paying them kickbacks of 10% or more of the dollar amount of stock and warrants that investors purchased. Knippa went so far as to tout ForceField on the Fox Business Network’s “Varney & Co.” show as a purported market commentator without disclosing to the host or the viewers that he was ForceField’s purported head of investor relations and was soliciting investors in exchange for kickbacks he expected to receive from St. Julien.
- In each of the three schemes, St. Julien and the other Defendants tried to conceal their illegal conduct by, among other things, having St. Julien pay most of the kickbacks through an offshore nominee he controlled. Mitchell and some of the Registered Representative Defendants also sought to conceal their illegal conduct by communicating with each other on prepaid, disposable (i.e., “drop” or “burner”) phones. Finally, St. Julien, Mitchell, and some of the Registered Representative Defendants sought to conceal their illegal conduct by communicating with each other using an encrypted, content-expiring messaging app on their cellphone.