U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 18924 / October 7, 2004
SECURITIES AND EXCHANGE COMMISSION v. GURSEL MANDACI, 00 Civ. 6635 (SWAIN/MAAS) (S.D.N.Y.)
On September 27, 2004 the Honorable Laura Taylor Swain, United States District Judge for the Southern District of New York, granted the Commission's motion for summary judgment against Gursel Mandaci and denied Mandaci's cross-motion for summary judgment. The court enjoined Mandaci from violating the antifraud provisions of the federal securities laws, Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The court also ordered Mandaci to disgorge $22,311.87 in ill-gotten gains plus $8,103.18 in prejudgment interest, and imposed a $50,000 civil penalty.
The Commission alleged in its complaint that Mandaci used postings on the Internet to inflate the price of securities he had purchased in order to create short-term trading profits. Mandaci purchased thinly-traded penny stocks using a margin account he held at an online broker. Then, using three different identities on the Internet, Mandaci made large numbers of postings that touted the issuers. Mandaci's use of different identities was designed to create the false impression that there was widespread interest in the stocks he owned. In addition, the postings contained false information about the issuers and baseless price predictions. Mandaci profited by selling his shares when the market prices rose without his disclosing his sales to the public. While Mandaci was touting these stocks, the issuers' market capitalization increased by more than $92 million.
See also Litigation Release No. 16682 (September 6, 2000).