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U.S. Securities and Exchange Commission


Litigation Release No. 20931 / March 5, 2009

Securities and Exchange Commission v. Anthony Fareri, Fareri Financial Services, Inc. d/b/a Amerifinancial, and Anthony Fareri & Associates, Inc., Civil Action No. 09-80360-CIV (S.D. Fla., March 3, 2009)

SEC Charges Former Florida Stockbroker and Broker Dealer with Securities Fraud in $4.7 Million Market Manipulation and Kickback Case

On Tuesday, March 3, 2009, the Securities and Exchange Commission filed a complaint against former Florida stockbroker Anthony Fareri, 43, Fareri Financial Services, Inc. d/b/a Amerifinancial ("FFS"), and Relief Defendant Anthony Fareri & Associates, Inc. ("AFAI") for their involvement in a market manipulation and kickback scheme that defrauded customers of the Boca Raton brokerage firm.

The SEC complaint, filed in the United States District Court for the Southern District of Florida, alleges that in 2004 and 2005:

  • Fareri defrauded his customers of more than $4.7 million by purchasing and otherwise acquiring for their accounts worthless shares of two shell companies as part of a fraudulent scheme to manipulate the companies' stock.
  • Fareri worked together with a Florida investor, Paul Harary, to create an artificial market for the two stocks. Fareri created the demand for the stocks by purchasing them for FFS's customers. Harary controlled the supply of the unrestricted shares and sold them.
  • Fareri and Harary manipulated the price of the two stocks using pre-arranged matched orders to move up the price and to create the illusion of market demand.
  • As part of the scheme, Fareri received kickbacks totaling more than $1 million. He also received more than $160,000 in commissions and/or markups.
  • Fareri's defrauded customers included retirees who had limited investment experience and relied exclusively on Fareri to invest their money in accordance with their conservative risk tolerance and investment objectives.

According to the complaint, the two shell companies were Secure Solutions Holdings, Inc. (SSLX) and American Financial Holdings, Inc. (AFHJ). Each traded on the over-the-counter market and was quoted on the Pink Sheets.

The Commission's complaint alleges that Fareri and FFS violated Section 17(a) of the Securities Act of 1933, Sections 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder and that FFS also violated Section 15(c)(1) of the Exchange Act. The complaint seeks permanent injunctions, disgorgement plus prejudgment interest and civil penalties. AFAI is not alleged to have engaged in any federal securities law violations, but is alleged to hold or control funds that represent fruits of violations committed by the defendants.

On September 24, 2007, Paul Harary consented to a final judgment that permanently enjoined him from violating the antifraud and securities registration provisions of the federal securities laws and directed him to pay approximately $4 million in disgorgement and prejudgment interest. See Securities and Exchange Commission v. Paul Harary, Civil Action No. 07-80875-CIV (S.D. Fla., Sept. 24, 2007). Harary also pleaded guilty to conspiracy to commit mail and wire fraud in parallel criminal actions brought in the United States District Court for the District of Columbia. See United States v. Harary, Crim. No. 07-Cr.-209 (EGS) (D.D.C.).

For additional information, see Litigation Release No. 20293 (September 24, 2007) and Release No. 34-52037 (July 15, 2005).

The Commission acknowledges the assistance of the U.S. Attorney's Office for the District of Columbia, the Federal Bureau of Investigation, the United States Postal Inspection Service, NASD (now known as the Financial Industry Regulatory Authority), and the British Columbia Securities Commission.

The Commission's investigation in this matter is ongoing.

The Commission has published guidance for investors concerning investments in microcap stocks. See: http://www.sec.gov/investor/pubs/microcapstock.htm.

SEC Complaint



Modified: 03/05/2009