U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 20712 / September 11, 2008
Securities and Exchange Commission v. Bruce Grossman and Jonathan Curshen, Civil Action No. 08 Civ. 7893 (PGG) (S.D.N.Y.)
SEC Charges Two Stock Promoters With Market Manipulation
The Securities and Exchange Commission yesterday charged two stock promoters with engaging in a fraudulent broker bribery scheme designed to manipulate the market for the common stock of Industrial Biotechnology, Corp. ("IBOT").
The complaint, filed yesterday in federal court in Manhattan, alleges that beginning in at least June 2008, Bruce Grossman and Jonathan Curshen engaged in an undisclosed kickback arrangement with an individual who claimed to represent a group of registered representatives with trading discretion over the accounts of wealthy customers. Unbeknownst to Grossman and Curshen, the individual actually was an undercover FBI agent. Grossman and Curshen promised to pay a 25% kickback to the agent and the registered representatives he purported to represent in exchange for the purchase of up to $3 million of IBOT stock through the customers' accounts.
The complaint further alleges that from June 27 to July 2, 2008, Grossman and Curshen instructed the agent to purchase approximately 85,000 shares of IBOT stock for a total of approximately $76,000 through matched trades using detailed instructions concerning the size, price and timing of the purchase orders. Thereafter, Grossman and Curshen paid bribes of almost $19,000 to the agent.
The complaint charges Grossman and Curshen with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The Commission seeks permanent injunctive relief, disgorgement of ill-gotten gains, if any, plus pre-judgment interest, civil penalties, and an order prohibiting Defendants from participating in any offering of penny stock.
The Commission acknowledges assistance provided by the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation in this matter.